ECB Corporate QE and the Loan Supply to Bank-Dependent Firms

50 Pages Posted: 13 Sep 2019

See all articles by Frank Betz

Frank Betz

European Union - European Investment Bank

Roberto A. De Santis

European Central Bank (ECB) - Directorate General Economics

Date Written: September, 2019

Abstract

Using a representative sample of businesses in the euro area, we show that Eurosystempurchases of corporate bonds under the Corporate Sector Purchase programme (CSPP)increased the net issuance of debt securities, triggering a shift in bank loan supply infavour of firms that do not have access to bond-based financing. Identification comes frommatching bank-dependent firms to their lenders and accounting for the effect of CSPPon banks’ activity in the syndicated loan market. In a difference-in-differences setting,we show that credit access improved relatively more for firms borrowing from banksrelatively more exposed to CSPP-eligible firms. Unlike in previous studies, this resultapplies regardless of bank balance sheet quality as measured by Tier 1 and NPL ratios.

Keywords: corporate sector purchase programme, ECB, loan supply, Unconventional monetary policy

JEL Classification: E52, E58, G01, G21, G28

Suggested Citation

Betz, Frank and De Santis, Roberto A., ECB Corporate QE and the Loan Supply to Bank-Dependent Firms (September, 2019). ECB Working Paper No. 2314, Available at SSRN: https://ssrn.com/abstract=3453159

Frank Betz (Contact Author)

European Union - European Investment Bank ( email )

98-100 Boulevard Konrad Adenauer
L-2950
Luxembourg

Roberto A. De Santis

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

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