The Collateral Channel of Monetary Policy

Anne-Laure Delatte (), Pranav Garg and Jean Imbs
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Anne-Laure Delatte: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique
Pranav Garg: Yale University [New Haven]

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Abstract: We present evidence that a loosening in collateral requirements instigated by the European Central Bank in 2012 did result in an expansion of credit, with real effects on firms' investment, productivity, and dividends. This is a novel result, obtained thanks to our identification methodology. We partition banks into categories according to the pre-reform distributions of their overall loan portfolios, so that the comparison is performed between banks with different exposures to the change in collateral constraint, but otherwise similar loan portfolios. The policy has economy-wide real effects that are economically significant: Relaxing collateral constraints by one standard deviation results in an increase of 0.3σ in investment and productivity, and of 0.26σ in dividends.

Keywords: E44 E58 G21 G32 Collateral constraints unconventional monetary policy credit supply real effects; E44; E58; G21; G32 Collateral constraints; unconventional monetary policy; credit supply; real effects (search for similar items in EconPapers)
Date: 2023-12-11
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