The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data



Table 3

Main banks’ balance sheet items as a percentage of the total assets according to bank
according to bank liquidity

6 most liquid banks

4 medium liquidity
banks

8 less liquid banks

1992

1995

1998

1992

1995

1998

1992

1995

1998

Assets

Credit to private non-
financial sector

37.7

34.1

34.8

49.0

40.1

43.5

50.4

50.7

44.1

Domestic money
market

2.6

3.6

7.1

1.7

3.1

3.4

2.4

2.6

0.6

Government
securities

22.6

13.3

5.5

16.0

14.7

7.0

9.8

7.5

1.5

Deposits in foreign

MFIs_____________

6.7

15.9

13.2

3.6

13.4

8.2

8.6

9.7

7.9

Liabilities

Deposits of private
non-financial sector

63.5

50.7

38.1

70.6

66.1

53.0

56.4

45.8

31.7

Domestic money
market

2.2

4.1

7.5

1.1

1.0

1.1

6.9

7.0

2.9

Capital

9.7

7.3

6.3

9.2

8.3

6.1

10.0

7.4

3.4

Deposits of foreign

MFIs_____________

6.8

13.6

17.1

3.1

8.2

12.2

11.4

14.7

16.3

From Table 4 one concludes that the credit share is basically the same regardless the
capitalisation ratio, but no clear tendency exists for the deposits share. On the other hand
there seems to be a tendency for less capitalised banks to exhibit larger shares of
government bonds and for more capitalised banks to exhibit a larger share of deposits of
foreign MFIs.

Let us now focus on the econometric results. As expected, some preliminary tests
showed that in the last years of the sample the relation between credit granted to private
sector and deposits underwent a huge structural break. As the consequences of this
structural break seem to be more damaging for the estimated models when we introduce
data for 1998 we decided to exclude the observations for this last year from the analysis.

22



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