Unconventional monetary policy in the Euro area: Impacts on loans, employment, and investment
António Afonso
ISEG – Lisbon School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal
REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics, Lisbon, Portugal
CESifo, Center for Economic Studies and Ifo Institute, Munich, Germany
Search for more papers by this authorCorresponding Author
Francisco Gomes Pereira
ISEG – Lisbon School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal
REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics, Lisbon, Portugal
Correspondence
Francisco Gomes Pereira, ISEG, Universidade de Lisboa; REM/UECE. R. Miguel Lupi 20, 1249-078 Lisbon, Portugal.
Email: [email protected]
Search for more papers by this authorAntónio Afonso
ISEG – Lisbon School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal
REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics, Lisbon, Portugal
CESifo, Center for Economic Studies and Ifo Institute, Munich, Germany
Search for more papers by this authorCorresponding Author
Francisco Gomes Pereira
ISEG – Lisbon School of Economics and Management, Universidade de Lisboa, Lisbon, Portugal
REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics, Lisbon, Portugal
Correspondence
Francisco Gomes Pereira, ISEG, Universidade de Lisboa; REM/UECE. R. Miguel Lupi 20, 1249-078 Lisbon, Portugal.
Email: [email protected]
Search for more papers by this authorAbstract
Using a dataset of bank- and regional-level data, we study the effectiveness and heterogeneity of the transmission mechanism of the ECB's large scale asset purchases (LSAPs) to the real economy. Our results indicate that banks more exposed to government debt securities had higher growth of loans and loans relative to total assets than less exposed banks after the asset purchase programme (APP), but not after the pandemic emergency purchase programme (PEPP). Furthermore, our results demonstrate that regions where banks are more exposed to government securities exhibit more favorable outcomes after the APP in GDP, fixed capital formation, unemployment, and compensation of employees than regions with less exposed banks, via the bank lending channel. We argue that banks' exposure to LSAPs targeted assets and their geographical location is an important factor determining the magnitude and heterogeneity of the portfolio rebalancing transmission mechanism to the real economy.
CONFLICT OF INTEREST STATEMENT
The authors have no conflicts of interest to disclose. Any remaining errors are the authors' sole responsibility.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from Bureau van Dijk-BankFocus. Restrictions apply to the availability of these data, which were used under license for this study. Data are available from the author(s) with the permission of Bureau van Dijk-BankFocus.
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