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

71 Pages Posted: 16 Jun 2018 Last revised: 21 Oct 2024

See all articles by Aytekin Ertan

Aytekin Ertan

London Business School

Anya Kleymenova

Board of Governors of the Federal Reserve System

Marcel Tuijn

Southern Methodist University (SMU)

Date Written: October 20, 2024

Abstract

We study the spillover effects of financial disintermediation on the supply of credit to small and medium enterprises (SMEs). We find 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 than SMEs in the same country and industry. SMEs use these funds to invest in real activities and increase employment. We verify that our 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 once new liquidity injections stop, and the policy reaches a steady-state.

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 (October 20, 2024). 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, London NW1 4SA
United Kingdom
00442070008131 (Phone)

HOME PAGE: http://www.aytekinertan.com

Anya V. Kleymenova (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2662 (Phone)

Marcel Tuijn

Southern Methodist University (SMU)

6212 Bishop Blvd.
Dallas, TX 75275
United States

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