Financial Intermediation Through Financial Disintermediation: Evidence from the ECB Corporate Sector Purchase Programme

72 Pages Posted: 16 Jun 2018 Last revised: 3 Mar 2020

See all articles by Aytekin Ertan

Aytekin Ertan

London Business School

Anya Kleymenova

The University of Chicago Booth School of Business

Marcel Tuijn

Erasmus University Rotterdam (EUR); University of Notre Dame - Mendoza College of Business

Date Written: February 27, 2020

Abstract

We study the spillover effects of financial disintermediation on the supply of credit to small and medium enterprises (SMEs). We find that direct central bank lending to large corporations induces banks to increase lending to SMEs by 8 to 12 percent. This effect is stronger for liquidity-constrained banks. SMEs with relationship banks affected by disintermediation borrow approximately €77,750 more relative to SMEs in the same country and industry. We verify that these inferences are not due to changing economic fundamentals, demand from SMEs, or selection in central bank financing. Despite documenting positive effects, we also find that they disappear in the long term, casting some doubt on the structural efficacy of financial disintermediation as a tool to enhance bank lending to SMEs.

Keywords: small businesses; credit supply; economic growth; monetary policy; real effects

JEL Classification: E52; E58; E65; G21; G28

Suggested Citation

Ertan, Aytekin and Kleymenova, Anya V. and Tuijn, Marcel, Financial Intermediation Through Financial Disintermediation: Evidence from the ECB Corporate Sector Purchase Programme (February 27, 2020). Fama-Miller Working Paper ; Chicago Booth Research Paper No. 18-06. Available at SSRN: https://ssrn.com/abstract=3197214 or http://dx.doi.org/10.2139/ssrn.3197214

Aytekin Ertan

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
442070008131 (Phone)

Anya V. Kleymenova (Contact Author)

The University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-4348 (Phone)

Marcel Tuijn

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

University of Notre Dame - Mendoza College of Business ( email )

Notre Dame, IN 46556-5646
United States

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