Credit Subsidies

48 Pages Posted: 18 Jan 2016

See all articles by Isabel H. Correia

Isabel H. Correia

Bank of Portugal - Department of Economics; Centre for Economic Policy Research (CEPR)

Fiorella De Fiore

Bank for International Settlements (BIS) - Monetary and Economic Department

Pedro Teles

Federal Reserve Bank of Chicago; Centre for Economic Policy Research (CEPR)

Oreste Tristani

European Central Bank (ECB)

Date Written: January 18, 2016

Abstract

In a model with costly financial intermediation and financial disturbances, credit subsidies are desirable, irrespective of how they are financed. They are especially useful when the zero lower bound constraint is reached. They are superior to other credit policies such as direct lending.

Keywords: credit policy, credit subsidies, monetary policy, zero-lower bound on nominal interest rates, banks, costly enforcement

JEL Classification: E31, E40, E44, E52, E58, E62, E63

Suggested Citation

Horta Correia, Isabel and De Fiore, Fiorella and Teles, Pedro and Tristani, Oreste, Credit Subsidies (January 18, 2016). ECB Working Paper No. 1877, Available at SSRN: https://ssrn.com/abstract=2717349 or http://dx.doi.org/10.2139/ssrn.2717349

Isabel Horta Correia (Contact Author)

Bank of Portugal - Department of Economics ( email )

Av Almirante Reis, 71
P-1150-012 Lisboa
Portugal
+351 21 312 8397 (Phone)
+351 21 813 2221 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Fiorella De Fiore

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Pedro Teles

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-2947 (Phone)
312-322-2357 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Oreste Tristani

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0049 69 1344 6000 (Fax)

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