Authors: Georgios Spiliotopoulos, Timotheos Aggelidis

Title: The Role of Financial Information on Banks’ Credit Policy: Euro Area Evidence.

Abstract

The paper examines how financial Information affects banking Credit Policy.   We conclude that ECB announcements, except transparency and clarity of monetary policy, also affect banking Credit Policy. By constructing a new Index of Information (Info Index) based on European Central Bank’s public statements (speeches, conference discussions and media interviews), we show evidence that an increase in financial Information leads to abatement on banks’ lending. Our findings have important implications for policymakers since they have to avert real economic shocks. Further, in terms of these implications for banks’ managers, we show that they must react to financial information to keep the effectiveness of Credit policy.