Unconventional Monetary Policy Transmission and Bank Lending Relationships

Christophe Cahn, Anne Duquerroy () and William Mullins ()
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Anne Duquerroy: Banque de France, 75035 Paris Cedex 01, France
William Mullins: Rady School of Management, University of California San Diego, La Jolla, California 92093

Management Science, 2025, vol. 71, issue 2, 1187-1212

Abstract: Firms with only one bank relationship make up the majority of firms in many economies. This paper explores whether policy-driven lending is differentially transmitted to single-bank firms in comparison with the multibank firms that are the focus of the literature. Using unique variation in the ECB’s very long-term refinancing operations (VLTROs), which affected lending to firms discontinuously across credit ratings but within banks, we find selective transmission of VLTRO liquidity to single-bank firms. Banks apply higher lending standards to single-bank firms, with banking relationships determining both new lending and lending maturity. By contrast, banks appear to transmit policy lending near-uniformly across multibank firms.

Keywords: unconventional monetary policy transmission; relationship banking; SME finance (search for similar items in EconPapers)
Date: 2025
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http://dx.doi.org/10.1287/mnsc.2022.01871 (application/pdf)

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Working Paper: Unconventional Monetary Policy Transmission and Bank Lending Relationships (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:2:p:1187-1212

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