Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202866
Authors: 
Daetz, Stine Louise
Subrahmanyam, Marti G.
Tang, Dragon Yongjun
Wang, Sarah Qian
Year of Publication: 
2018
Series/Report no.: 
Danmarks Nationalbank Working Papers 126
Abstract: 
Can monetary stimulus boost corporate investment? We answer this question by studying ECB's 2011-2012 Longer-Term Refinancing Operations (LTROs), which provided cheap funding to Eurozone banks. We find that, relative to their non-Eurozone counterparts, Eurozone firms invested more after the LTROs. However, riskier banks took more funds from the LTROs, and their uptake is negatively associated with their clients' investment. In other words, firms reduced investment when their banks took cheap LTRO funds from the ECB. Overall, our results highlight the difficulty of boosting investment by injecting liquidity into the banking system, especially with impaired bank balance sheets.
Subjects: 
Unconventional Monetary Policy
ECB Interventions
Corporate Policies
Real Economy
JEL: 
G32
G38
Document Type: 
Working Paper

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