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On the effects of the ECB’s funding policies on bank lending and the demand for the euro as an international reserve

Author

Listed:
  • Heather D. Gibson

    (Bank of Greece)

  • Stephen G. Hall

    (University of Leicester, Bank of Greece and University of Pretoria)

  • Pavlos Petroulas

    (Bank of Greece)

  • George S. Tavlas

    (Bank of Greece and University of Leicester)

Abstract

The euro-area financial crisis that erupted in 2009 was marked by negative confidence effects that had both domestic and international ramifications. Domestically, bank lending declined sharply. Internationally, the demand for the euro as a reserve currency fell precipitously. We investigate the effects of ECB policies on banks’ lending, taking account of national and regional spillovers. We also assess the effects of ECB policies on euro reserve holdings. The results suggest that those policies were important for rebuilding confidence, thus supporting both bank lending and the use of the euro as a reserve asset.

Suggested Citation

  • Heather D. Gibson & Stephen G. Hall & Pavlos Petroulas & George S. Tavlas, 2019. "On the effects of the ECB’s funding policies on bank lending and the demand for the euro as an international reserve," Working Papers 270, Bank of Greece.
    • Handle: RePEc:bog:wpaper:270
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    References listed on IDEAS

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    7. Gibson, Heather D. & Hall, Stephen G. & Petroulas, Pavlos & Spiliotopoulos, Vassilis & Tavlas, George S., 2020. "The effect of emergency liquidity assistance (ELA) on bank lending during the euro area crisis," Journal of International Money and Finance, Elsevier, vol. 108(C).
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    More about this item

    Keywords

    euro area financial crisis; monetary policy operations; European banks; spatial panel model;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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