Illiquid Collateral and Bank Lending during the European Sovereign Debt Crisis

J. Barth Lemy, Vincent Bignon and Benoît Nguyen
Authors registered in the RePEc Author Service: Jean Barthélemy

Working papers from Banque de France

Abstract: We assess the effect of accepting illiquid assets as collateral at the central bank on banks lending activity. We study the lending activity of the 177 largest banks in the Euro area between 2011m1 and 2014m12 and the composition of their pool of collateral pledged with the Eurosystem. Panel regression estimates show that the banks that pledged more illiquid collateral with the Eurosystem increased their lending to non-financial firms and households: a one standard deviation increase in the volume of illiquid collateral increase lending by 0.6%.

Keywords: collateral; loans; central bank; euro crisis. (search for similar items in EconPapers)
JEL-codes: E52 E58 G01 G21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2017
New Economics Papers: this item is included in nep-ban, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Illiquid Collateral and Bank Lending during the European Sovereign Debt Crisis (2017)
Working Paper: Illiquid Collateral and Bank Lending during the European Sovereign Debt Crisis (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:631

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