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The Effect of Central Bank Liquidity Injections on Bank Credit Supply
2017
Social Science Research Network
We study the effect of the largest central bank liquidity injection ever conducted, the European Central Bank 3-Year LTRO, on bank credit supply. Using the Italian credit registry, we show that banks exposed to the foreign wholesale market experience a run and reduce credit supply before the intervention and expand it after the central bank liquidity provision. We then exploit a regulatory change that expands the definition of central bank eligible collateral to identify the portion of
doi:10.2139/ssrn.2930063
fatcat:6ok5nqfei5hj5cs3kwljheao6a