The Interest of Being Eligible
Sonnier J-S.m,
Charles O'Donnell and
O. Toutain
Authors registered in the RePEc Author Service: Jean-Stéphane Mésonnier
Working papers from Banque de France
Abstract:
Major central banks often accept pooled individual corporate loans as collateral in their refinancing operations with credit institutions. Such ``eligible'' loans to firms therefore provide a liquidity advantage to the banks that originate them. Banks may in turn pass on this advantage to the borrowers in the form of a reduced liquidity risk premium: the eligibility discount. We exploit a temporary surprise extension of the Eurosystem's universe of eligible collateral to mediumquality corporate loans, the Additional Credit Claims (ACC) program of February 2012, to assess the eligibility discount to corporate loans spreads in France. We find that becoming eligible to the Eurosystem's collateral framework translates into a reduction in rates by 7bp for new loans issued to ACC-firms, controlling for loan-, firm- and bank-level characteristics. In line with the opportunity-cost view of collateral choice, we also find evidence that this collateral channel of monetary policy is only active for banks which ex ante pledged more credit claims as part of their collateral with the Eurosystem.
Keywords: monetary policy; collateral framework; eligibility discount; Eurosystem. (search for similar items in EconPapers)
JEL-codes: C21 E43 E52 G21 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)
Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... cuments/dt_636_0.pdf (application/pdf)
Related works:
Journal Article: The Interest of Being Eligible (2022) 
Working Paper: The Interest of Being Eligible (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:636
Access Statistics for this paper
More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().