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The Transmission Mechanism of Credit Support Policies in the Euro Area

Author

Listed:
  • Boeckx, Jef
  • De Sola Perea, Maite
  • Peersman, Gert

Abstract

Using a sample of 131 banks, we find that the Eurosystem's credit support policies have been successful in stimulating bank credit to the private sector: the impact was greater on the loan supply of smaller, less liquid, less capitalized banks and those more dependent on wholesale funding. The role of bank capital is, however, ambiguous. Besides the above favorable direct effect on loan supply, lower levels of bank capitalization at the same time mitigate the size, retail and liquidity effects of these policies. The low capital drag on the other channels has even been dominant during the sample period.

Suggested Citation

  • Boeckx, Jef & De Sola Perea, Maite & Peersman, Gert, 2017. "The Transmission Mechanism of Credit Support Policies in the Euro Area," ECMI Papers 12624, Centre for European Policy Studies.
    • Handle: RePEc:eps:ecmiwp:12624
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    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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