Unconventional Monetary Policy and Bank Lending Relationships

76 Pages Posted: 18 May 2017 Last revised: 27 Jun 2022

See all articles by Christophe Cahn

Christophe Cahn

Banque de France

Anne Duquerroy

Banque de France

William Mullins

University of California, San Diego (UCSD)

Multiple version iconThere are 2 versions of this paper

Date Written: June 23, 2022

Abstract

Firms with only one bank relationship make up the majority of firms in many economies. This paper explores whether policy-driven lending is differentially transmitted to single-bank firms, in comparison to the multi-bank firms that have been the focus of the literature. Using unique variation in the ECB’s Very Long-Term Refinancing Operations (VLTROs), which affected lending to firms discontinuously across credit ratings but within banks, we find selective transmission of VLTRO liquidity to single-bank firms. Banks apply higher lending standards to single-bank firms, with banking relationships determining both new lending and lending maturity. By contrast, banks appear to transmit policy lending near-uniformly across multi-bank firms.

Keywords: Unconventional Monetary Policy Transmission, Relationship Banking, SME Finance

JEL Classification: E52, G21, E58, E51, G01

Suggested Citation

Cahn, Christophe and Duquerroy, Anne and Mullins, William, Unconventional Monetary Policy and Bank Lending Relationships (June 23, 2022). Available at SSRN: https://ssrn.com/abstract=2970199 or http://dx.doi.org/10.2139/ssrn.2970199

Christophe Cahn

Banque de France ( email )

Paris
France

Anne Duquerroy

Banque de France ( email )

Paris
France

William Mullins (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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