Joint Seminar in Macroeconomics - Mariassunta Giannetti (Stockholm School of Economics)

Money Markets and Bank Lending: Evidence from the Adoption of Tiering

Abstract

Exploiting the introduction of the ECB’s tiering system for remunerating excess reserve holdings, we provide evidence on the importance of the smooth functioning of the money market for bank lending. We show that when the tiering was first discussed, but before its official announcement and implementation, bank valuations increased. Using unique transaction-level data for money market activity and bank lending, we then show that while equity prices suggest that the first unofficial announcement was credible, the positive effects of tiering on bank lending materialize only after the system was implemented and the money market reallocated excess liquidity. The transmission mechanism is enhanced for banks with excess exemptions, which regain access to the money market and extend more credit than other banks, rather than for banks with excess liquidity whose valuation increase most.

Please reply by email to nbbmacro.seminar@nbb.be if you wish to participate to this webinar and/or if you want to have an appointment with the speaker.

Organised by: Peter Claeys (VUB), Pierrick Clerc (ULiège), Ferre De Graeve (KU Leuven), Romain Houssa (UNamur), Robert Kollmann (ULB), Yasin Kursat Önder (UGent), Luca Pensieroso (UCLouvain), Roland Winkler (UAntwerpen) and Raf Wouters (NBB)

 

Contact : Romain Houssa - romain.houssa@unamur.be
Télecharger : vCal