Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/117341 
Year of Publication: 
2015
Series/Report no.: 
IWH Discussion Papers No. 9/2015
Publisher: 
Leibniz-Institut für Wirtschaftsforschung Halle (IWH), Halle (Saale)
Abstract: 
With a unique loan portfolio maintained by a top-20 universal bank in Germany, this study tests whether unconventional monetary policy by the European Central Bank (ECB) reduced corporate borrowing costs. We decompose corporate lending rates into refinancing costs, as determined by money markets, and markups that the bank is able to charge its customers in regional markets. This decomposition reveals how banks transmit monetary policy within their organizations. To identify policy effects on loan rate components, we exploit the co-existence of eurozone-wide security purchase programs and regional fiscal policies at the district level. ECB purchase programs reduced refinancing costs significantly, even in an economy not specifically targeted for sovereign debt stress relief, but not loan rates themselves. However, asset purchases mitigated those loan price hikes due to additional credit demand stimulated by regional tax policy and enabled the bank to realize larger economic margins.
Subjects: 
unconventional monetary policy
asset purchase programs
ECB
interest rate channel
internal capital markets
JEL: 
G01
G21
E42
E43
E52
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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