Central bank's liquidity provision and firms' financial constraints

Radeef Chundakkadan and Subash Sasidharan

Economic Modelling, 2020, vol. 89, issue C, 245-255

Abstract: This paper investigates the impact of central bank's liquidity operations on the financial constraints of the bank-dependent firms. We use the Reserve Bank of India's liquidity operation called Term Repo Operation (TRO) in the study. The empirical analysis is based on a large scale firm-level data for the period 2011–2016 and panel logit estimation method. Our findings indicate that the financial constraints of the bank-dependent firms have reduced than their counterparts since the introduction of the operation. We also show that larger firms reap significant benefit out of TRO than the smaller firms.

Keywords: Financial constraints; Term repo operation; Central bank (search for similar items in EconPapers)
JEL-codes: E58 G32 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:89:y:2020:i:c:p:245-255

DOI: 10.1016/j.econmod.2019.10.025

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