Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/234075
Authors: 
Jasova, Martina
Mendicino, Caterina
Supera, Dominik
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2521
Abstract: 
We show that a reduction in lender of last resort (LOLR) policy uncertainty posi-tively affects bank lending and propagates to investment and employment. We exploita unique policy that reduced uncertainty regarding the availability of future LOLRfunding for banks as a quasi-natural experiment. Using micro-level data on banks, firms and loans in Portugal, we generate cross-sectional variation in banks' exposureto uncertainty and find that the size of thehaircut subsidy - the gap between privatemarket and central bank security valuations - plays a key role in the propagation ofthe shock to lending and the real economy.
Subjects: 
Bank Credit
Haircut Subsidy
Central Bank Liquidity
Policy Uncertainty
Firm-level Employment and Investment
JEL: 
E44
E52
E58
G21
G32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4521-9
Document Type: 
Working Paper

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