Paying Banks to Lend? Evidence from the Eurosystem's TLTRO and the Euro Area Credit Registry

Emilie Da Silva, Vincent Grossmann-Wirth (), Benoit Nguyen and Miklos Vari

Working papers from Banque de France

Abstract: Since March 2020 the Eurosystem has provided subsidies to Euro-Area banks, via its Targeted Longer-Term Refinancing Operations (TLTRO). Under this program, banks can borrow from the Eurosystem at a rate as low as -1%, conditional on their lending to the real economy. This paper uses a simple theoretical model to disentangle between so-called “targeted” and “profitability" channels. We test those channels on the new Euro-Area credit registry data (AnaCredit). To overcome reverse causality, we employ novel identification strategies based on TLTRO parameters set before the pandemic and unexpected changes afterward. We find support for both channels and conclude the targeted channel is stronger.

Keywords: TLTRO; ECB; Funding-for-Lending; AnaCredit (search for similar items in EconPapers)
JEL-codes: G11 G15 G23 H55 Q54 Q56 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-eec and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:848

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