The impact of the ECB's targeted long-term refinancing operations on banks' lending policies: The role of competition

Arbeitspapier

We assess the impact of the Eurosystem's Targeted Long-Term Refinancing Operations (TLTROs) on the lending policies of euro area banks. We first build a theoretical model in which banks compete in the credit and deposit markets. We distinguish between direct and indirect effects. Direct effects take place because bidding banks expand their loan supply due to the lower marginal costs implied by the TLTROs. Indirect effects on non-bidders operate via changes in the competitive environment in banks' credit and deposit markets. We then test these predictions with a sample of 130 banks from 13 countries focusing on the first TLTRO series. Regarding direct effects, we find an easing impact on margins on loans to relatively safe borrowers, but no impact on credit standards. Regarding indirect effects, there is a positive impact on the loan supply on non-bidders which operates via an easing of credit standards.

Object Details

• ISBN: 978-92-899-4007-8
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2364

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Monetary Policy ; Central Banks and Their Policies
• Subject: unconventional monetary policy ; TLTROs ; lending policies ; competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): C. Andreeva, Desislava ; García-Posada, Miguel
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2020

Further information

• DOI: doi:10.2866/3836
• Handle: http://hdl.handle.net/10419/228242
• Last update: 10.03.2025, 11:43 AM CET