NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism

Stephen G. Cecchetti

NBER Working Paper No. 7151
Issued in June 1999
NBER Program(s):   ME

Among the many challenges facing the new Eurosystem is the possibility that the regions of the euro area will respond differently to interest rate changes. In this essay, I provide evidence that differences in financial structure are the proximate cause for these national asymmetries in the monetary policy transmission mechanism, and that these differences in financial structure are a result of differences in legal structure. My conclusion is that unless legal structures are harmonized across Europe, the financial structures and monetary transmission mechanisms of the European union countries will remain diverse.

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Document Object Identifier (DOI): 10.3386/w7151

Published: Economic Policy Review of the Federal Reserve Bank of New York, Vol. 5,no. 2 (July 1999): 9-28. citation courtesy of

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