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Article: Can Central Banks Boost Corporate Investment? Evidence from ECB Liquidity Injections
Title | Can Central Banks Boost Corporate Investment? Evidence from ECB Liquidity Injections |
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Authors | |
Issue Date | 1-Mar-2023 |
Publisher | Society for Financial Studies |
Citation | The Review of Corporate Finance Studies, 2023, v. Forthcoming How to Cite? |
Abstract | Liquidity injections by central banks have become frequent and massive, but their real effects on corporate investment remain unclear. We examine the longer-term refinancing operations (LTROs) of the European Central Bank (ECB) during the euro-zone sovereign crisis and show that greater LTRO funding to banks is associated with lower corporate investment. Riskier banks received funds through the LTROs and subsequently increased their holdings of risky sovereign debt. Corporate investment reductions are associated with these banks. Further, concurrent fiscal and regulatory policies impeded the effectiveness of the ECB liquidity injections. Our findings identify the contributing factors for these failures of monetary policy. |
Persistent Identifier | http://hdl.handle.net/10722/328540 |
ISSN | 2023 Impact Factor: 1.9 2023 SCImago Journal Rankings: 5.418 |
DC Field | Value | Language |
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dc.contributor.author | von Ruden, SL | - |
dc.contributor.author | Subrahmanyam, MG | - |
dc.contributor.author | Tang, DY | - |
dc.contributor.author | Wang, SQ | - |
dc.date.accessioned | 2023-06-28T04:46:01Z | - |
dc.date.available | 2023-06-28T04:46:01Z | - |
dc.date.issued | 2023-03-01 | - |
dc.identifier.citation | The Review of Corporate Finance Studies, 2023, v. Forthcoming | - |
dc.identifier.issn | 2046-9128 | - |
dc.identifier.uri | http://hdl.handle.net/10722/328540 | - |
dc.description.abstract | Liquidity injections by central banks have become frequent and massive, but their real effects on corporate investment remain unclear. We examine the longer-term refinancing operations (LTROs) of the European Central Bank (ECB) during the euro-zone sovereign crisis and show that greater LTRO funding to banks is associated with lower corporate investment. Riskier banks received funds through the LTROs and subsequently increased their holdings of risky sovereign debt. Corporate investment reductions are associated with these banks. Further, concurrent fiscal and regulatory policies impeded the effectiveness of the ECB liquidity injections. Our findings identify the contributing factors for these failures of monetary policy. | - |
dc.language | eng | - |
dc.publisher | Society for Financial Studies | - |
dc.relation.ispartof | The Review of Corporate Finance Studies | - |
dc.title | Can Central Banks Boost Corporate Investment? Evidence from ECB Liquidity Injections | - |
dc.type | Article | - |
dc.identifier.doi | 10.1093/rcfs/cfad006 | - |
dc.identifier.hkuros | 344636 | - |
dc.identifier.volume | Forthcoming | - |
dc.identifier.eissn | 2046-9136 | - |
dc.identifier.issnl | 2046-9128 | - |