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Unconventional Monetary Policy Transmission and Bank Lending Relationships

Author

Listed:
  • Cahn, Christophe
  • Duquerroy, Anne
  • Mullins, William

    (UC San Diego)

Abstract

Firms with only one bank relationship make up the majority of firms in many economies. This paper explores whether policy-driven lending is differentially transmitted to single-bank firms in comparison to the multi-bank firms that are the focus of the literature. Using unique variation in the ECB's Very Long-Term Refinancing Operations (VLTROs), which affected lending to firms discontinuously across credit ratings but within banks, we find selective transmission of VLTRO liquidity to single-bank firms. Banks apply higher lending standards to single-bank firms, with banking relationships determining both new lending and lending maturity. By contrast, banks appear to transmit policy lending near-uniformly across multi-bank firms.

Suggested Citation

  • Cahn, Christophe & Duquerroy, Anne & Mullins, William, 2017. "Unconventional Monetary Policy Transmission and Bank Lending Relationships," SocArXiv vgk25_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:vgk25_v1
    DOI: 10.31219/osf.io/vgk25_v1
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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