The Impact of Loose Monetary Policy on the Competitiveness of Czech Firms
The Impact of Loose Monetary Policy on the Competitiveness of Czech Firms

Summary/Abstract: The aim of this paper is to examine whether the policy of low interest rates and exchange rate commitment of the Czech National Bank affected the competitiveness of non-financial firms in the Czech Republic in the sectors of agriculture, construction and manufacturing.Panel techniques are employed to investigate the impact of monetary policy on selected indicators of firms’ competitiveness, measured by financial performance in this study. Size and sectoral characteristics are reflected when analysing the impact of monetary policy.The empirical evidence is based on firm-level data from the Amadeus database for the period between 2006 and 2015. Evaluating monetary policy effects on the whole sample,our empirical evidence suggested that the competitiveness of Czech firms measured by indicators of financial performance increases. The results vary among profitability ratios,but the highest influence was investigated for the ROE ratio. We found that monetary policy affected firm-specific characteristics, and firm-specific variables in interaction with monetary policy affected competitiveness of firms. FX interventions were also a significant factor in competitiveness in all cases.

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