Long-term deposit funding and demand for central bank funds: Evidence from targeted longer-term refinancing operations

Arbeitspapier

We exploit variation in the share of seniors across European banking markets to construct an IV for banks' dependence on long-term deposit funding and find that greater long-term deposit funding reduces demand for long-term central bank funding via targeted longer-term refinancing operations (TLTRO). This effect is stronger when banks face less competition. Long-term central bank funding further motivates banks to reduce their dependence on debt issuance and increase their money markets borrowing. Our findings are consistent with the idea that banks' access to stable funding can crowd out their incentive to apply for (long-term) central bank funding.

Object Details

• ISBN: 978-3-95729-943-7
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Deutsche Bundesbank Discussion Paper ; No. 12/2023

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Financial Institutions and Services: General ; Financial Institutions and Services: Government Policy and Regulation
• Subject: Monetary policy ; bank funding ; deposit financing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fudulache, Adina-Elena ; Goetz, Martin R.
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/273724
• Last update: 10.03.2025, 11:43 AM CET