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The transmission of targeted monetary policy to bank credit supply

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  • Volk, Matjaž

Abstract

In this paper I estimate the impact of Targeted Longer-Term Refinancing Operations (TLTRO) on the evolution of lending amounts and rates in Slovenia, with a specific focus on distinct effects of TLTRO-I and II. I use a combination of difference-in-differences and instrumental variable approach, which together with detail credit register data enable the identification of supply side effects of the TLTRO policy. The results show a supporting impact of targeted operations on bank loan supply, resulting in higher credit growth and lower rates. I find that the TLTRO-I was supportive through both the quantity and price channels, whereas the TLTRO-II only shows a significant impact on the credit amount. Further, I find the transmission of TLTRO-I was higher through better capitalized banks, whereas both policy waves supported lending to safe and stable firms with higher credit ratings.

Suggested Citation

  • Volk, Matjaž, 2024. "The transmission of targeted monetary policy to bank credit supply," The Quarterly Review of Economics and Finance, Elsevier, vol. 94(C), pages 104-112.
    • Handle: RePEc:eee:quaeco:v:94:y:2024:i:c:p:104-112
    DOI: 10.1016/j.qref.2024.01.003
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    More about this item

    Keywords

    Unconventional monetary policy; Central bank liquidity; Policy evaluation;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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