The Transmission of Unconventional Monetary Policy to Bank Credit Supply: Evidence from the TLTRO

Antonio Afonso and Joana Sousa-Leite

No 2019/65, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: We assess the transmission of the Targeted Longer-Term Refinancing Operations (TLTRO) to the bank credit supply for the Euro area (2014:05-2018:01) and for Portugal (2011:01-2018:01), using a panel data setup. For the Euro area, we find a positive relationship between the TLTRO and the amount of credit granted to the real economy. For the vulnerable countries, the effects of the TLTRO on the stock of credit increased from 2016 to 2017. Among the group of small banks, the effects are stronger in less vulnerable countries. We also find that competition has no statistically significant impact on the transmission of the TLTRO to the bank credit supply for the Euro area. For Portugal, using a difference-in-differences model, we find no statistically significant impact of the TLTRO on credit granted by banks. Finally, bidding banks set lower interest rates than non-bidding banks and the difference seems to be larger in 2017. In Portugal, the effects of the TLTRO on loan interest rates also increased from 2016 to 2017 and are stronger for small banks.

Keywords: Unconventional Monetary Policy; TLTRO; credit supply; lending interest rates; bank-lending channel; Euro area; Portugal. (search for similar items in EconPapers)
JEL-codes: C33 C87 E50 E51 E52 E58 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-ban, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: The transmission of unconventional monetary policy to bank credit supply: Evidence from the TLTRO (2020)
Working Paper: The transmission of unconventional monetary policy to bank credit supply: evidence from the TLTRO (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0652019

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