A panel data test of the bank lending channel in Sweden

In this paper, we test the bank lending channel of monetary
policy transmission in Sweden. Using a panel of bank balance sheet data
covering the period 1998:M1 to 2003:M6, we test for bank loan supply
shifts by segregating banks by asset size, liquidity and
capitalization. The main result is that small, illiquid and
undercapitalized banks are significantly affected by monetary policy,
which supports the hypothesis of the bank lending channel