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The Transmission Mechanism of Credit Support Policies in the Euro Area

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  • 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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    1. repec:nbb:ecrart:y:2017:m:december:i:iii:p:42-61 is not listed on IDEAS
    2. Laine, Olli-Matti, 2019. "The effect of TLTRO-II on bank lending," Research Discussion Papers 7/2019, Bank of Finland.
    3. repec:kuk:journl:v:50:y:2017:i:4:p:455-488 is not listed on IDEAS
    4. Altavilla, Carlo & C. Andreeva, Desislava & Boucinha, Miguel & Holton, Sarah, 2019. "Monetary policy, credit institutions and the bank lending channel in the euro area," Occasional Paper Series 222, European Central Bank.
    5. R. Wouters, 2016. "The transmission mechanism of new and traditional instruments of monetary and macroprudential policy," Economic Review, National Bank of Belgium, issue iii, pages 105-117, December.
    6. Joost Bats & Tom Hudepohl, 2019. "Impact of targeted credit easing by the ECB: Bank-level evidence," DNB Working Papers 631, Netherlands Central Bank, Research Department.
    7. Bredl, Sebastian, 2018. "The role of non-performing loans for bank lending rates," Discussion Papers 52/2018, Deutsche Bundesbank.
    8. van Holle, Frederiek, 2017. "Essays in empirical finance and monetary policy," Other publications TiSEM 30d11a4b-7bc9-4c81-ad24-5, Tilburg University, School of Economics and Management.

    More about this item

    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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