Who Takes the Ecb's Targeted Funding?

48 Pages Posted: 7 Jul 2020

See all articles by Olivier Vergote

Olivier Vergote

European Central Bank (ECB)

Tomohiro Sugo

affiliation not provided to SSRN

Date Written: July, 2020


This paper investigates motives of banks to borrow funds from the ECB through its first two series of targeted longer-term refinancing operations (TLTROs) allotted between September 2014 and March 2017. We quantify that the top-three parameters that determine banks’ take-up decisions are the price of the operation, the amount of eligible collateral of the bank, and the composition of that collateral. In particular, the opportunity for banks to transform their less liquid assets partly into liquid central bank reserves by pledging these assets as collateral with the central bank is a strong motive for take-up and suggests that accepting a broad set of collateral was important for the monetary easing provided by TLTROs. In addition, we find that the conditions attached to TLTRO participation and take-up played an important role in creating broad-based participation across banks of different financial strength and size.

Keywords: dynamic tobit panel, funding for lending, monetary policy operations, take-up behaviour, targeted longer-term refinancing operations

JEL Classification: C23, C24, E52, E58, G21

Suggested Citation

Vergote, Olivier and Sugo, Tomohiro, Who Takes the Ecb's Targeted Funding? (July, 2020). ECB Working Paper No. 20202439, Available at SSRN: https://ssrn.com/abstract=3644249 or http://dx.doi.org/10.2139/ssrn.3644249

Olivier Vergote (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314

Tomohiro Sugo

affiliation not provided to SSRN

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