59 Pages Posted: 19 Jun 2017 Last revised: 7 Sep 2017
Date Written: September 6, 2017
The European Central Bank’s Corporate Sector Purchase Programme (CSPP), launched in June 2016, increased the supply of capital for eligible Eurozone firms through direct corporate bond purchases. Using a difference-in-difference framework, we document a shift in the composition of credit from loan to bond financing for eligible (i.e., investment-grade rated) firms. High quality investment-grade rated firms increase acquisitions, while BBB rated firms increase cash holdings and capital expenditures. Banks with a high share of investment-grade rated firms increase lending particularly to private but not public firms after the announcement of the CSPP. Our results suggest that the CSPP has positive spillovers to firms that do not have access to bond financing and reduces financial constraints particularly of GIIPS firms with positive effects on the real sector.
Keywords: Monetary policy, CSPP, ECB, financial constraints, bond debt, real effects
JEL Classification: G01, G21, G28
Suggested Citation: Suggested Citation
Grosse-Rueschkamp, Benjamin and Steffen, Sascha and Streitz, Daniel, Cutting Out the Middleman – The ECB as Corporate Bond Investor (September 6, 2017). Available at SSRN: https://ssrn.com/abstract=2988158