  This paper analyzes the bank lending channel and the heterogeneous effects on
the euro area, providing evidence that the channel is indeed working. The
analysis of the transmission mechanism is based on structural impulse responses
to an unconventional monetary policy shock on bank loans. The Bank Lending
Survey (BLS) is exploited in order to get insights on developments of loan
demand and supply. The contribution of this paper is to use country-specific
data to analyze the consequences of unconventional monetary policy, instead of
taking an aggregate stance by using euro area data. This approach provides a
deeper understanding of the bank lending channel and its effects. That is, an
expansionary monetary policy shock leads to an increase in loan demand, supply
and output growth. A small north-south disparity between the countries can be
observed.
