Did ECB Liquidity Injections Help the Real Economy?

Stine Louise Daetz, Marti G. Subrahmanyam, Dragon Yongjun Tang, Sarah Qian Wang

Research output: Contribution to conferencePaperResearchpeer-review

Abstract

In an attempt to boost the Eurozone economy, the European Central Bank (ECB) launched a plethora of unconventional monetary interventions since 2010. While the series of Longer-Term Refinancing Operations (LTROs) was among the most prominent of these, their efficacy, measured by their impact on corporate policies in the Eurozone, is an important but unanswered issue. We analyze a large panel of individual corporations across countries in the Eurozone, and find that non-financial corporations issued more long-term debt and hoarded more cash following the ECB liquidity injections. However, this increase in corporate liquidity was not employed in a productive manner, as corporations generally did not subsequently increase their investments or employment, regardless of their banking connections. The exceptions to this weak response were corporations in countries with corresponding accommodative fiscal policies such as tax cuts.
Original languageEnglish
Publication date2017
Number of pages61
Publication statusPublished - 2017
Event2017 Financial Management Association Asia/Pacific Conference - Howard Civil Service International House, Taipei, Taiwan, Province of China
Duration: 25 May 201726 May 2017
http://www.fmaconferences.org/Taiwan/TaiwanProgram.htm

Conference

Conference2017 Financial Management Association Asia/Pacific Conference
LocationHoward Civil Service International House
CountryTaiwan, Province of China
CityTaipei
Period25/05/201726/05/2017
Internet address

Cite this

Daetz, S. L., Subrahmanyam, M. G., Tang, D. Y., & Wang, S. Q. (2017). Did ECB Liquidity Injections Help the Real Economy?. Paper presented at 2017 Financial Management Association Asia/Pacific Conference, Taipei, Taiwan, Province of China.
Daetz, Stine Louise ; Subrahmanyam, Marti G. ; Tang, Dragon Yongjun ; Wang, Sarah Qian. / Did ECB Liquidity Injections Help the Real Economy?. Paper presented at 2017 Financial Management Association Asia/Pacific Conference, Taipei, Taiwan, Province of China.61 p.
@conference{acde48523b534bc48fb8f79e410f9339,
title = "Did ECB Liquidity Injections Help the Real Economy?",
abstract = "In an attempt to boost the Eurozone economy, the European Central Bank (ECB) launched a plethora of unconventional monetary interventions since 2010. While the series of Longer-Term Refinancing Operations (LTROs) was among the most prominent of these, their efficacy, measured by their impact on corporate policies in the Eurozone, is an important but unanswered issue. We analyze a large panel of individual corporations across countries in the Eurozone, and find that non-financial corporations issued more long-term debt and hoarded more cash following the ECB liquidity injections. However, this increase in corporate liquidity was not employed in a productive manner, as corporations generally did not subsequently increase their investments or employment, regardless of their banking connections. The exceptions to this weak response were corporations in countries with corresponding accommodative fiscal policies such as tax cuts.",
author = "Daetz, {Stine Louise} and Subrahmanyam, {Marti G.} and Tang, {Dragon Yongjun} and Wang, {Sarah Qian}",
year = "2017",
language = "English",
note = "null ; Conference date: 25-05-2017 Through 26-05-2017",
url = "http://www.fmaconferences.org/Taiwan/TaiwanProgram.htm",

}

Daetz, SL, Subrahmanyam, MG, Tang, DY & Wang, SQ 2017, 'Did ECB Liquidity Injections Help the Real Economy?' Paper presented at, Taipei, Taiwan, Province of China, 25/05/2017 - 26/05/2017, .

Did ECB Liquidity Injections Help the Real Economy? / Daetz, Stine Louise ; Subrahmanyam, Marti G. ; Tang, Dragon Yongjun; Wang, Sarah Qian.

2017. Paper presented at 2017 Financial Management Association Asia/Pacific Conference, Taipei, Taiwan, Province of China.

Research output: Contribution to conferencePaperResearchpeer-review

TY - CONF

T1 - Did ECB Liquidity Injections Help the Real Economy?

AU - Daetz, Stine Louise

AU - Subrahmanyam, Marti G.

AU - Tang, Dragon Yongjun

AU - Wang, Sarah Qian

PY - 2017

Y1 - 2017

N2 - In an attempt to boost the Eurozone economy, the European Central Bank (ECB) launched a plethora of unconventional monetary interventions since 2010. While the series of Longer-Term Refinancing Operations (LTROs) was among the most prominent of these, their efficacy, measured by their impact on corporate policies in the Eurozone, is an important but unanswered issue. We analyze a large panel of individual corporations across countries in the Eurozone, and find that non-financial corporations issued more long-term debt and hoarded more cash following the ECB liquidity injections. However, this increase in corporate liquidity was not employed in a productive manner, as corporations generally did not subsequently increase their investments or employment, regardless of their banking connections. The exceptions to this weak response were corporations in countries with corresponding accommodative fiscal policies such as tax cuts.

AB - In an attempt to boost the Eurozone economy, the European Central Bank (ECB) launched a plethora of unconventional monetary interventions since 2010. While the series of Longer-Term Refinancing Operations (LTROs) was among the most prominent of these, their efficacy, measured by their impact on corporate policies in the Eurozone, is an important but unanswered issue. We analyze a large panel of individual corporations across countries in the Eurozone, and find that non-financial corporations issued more long-term debt and hoarded more cash following the ECB liquidity injections. However, this increase in corporate liquidity was not employed in a productive manner, as corporations generally did not subsequently increase their investments or employment, regardless of their banking connections. The exceptions to this weak response were corporations in countries with corresponding accommodative fiscal policies such as tax cuts.

M3 - Paper

ER -

Daetz SL, Subrahmanyam MG, Tang DY, Wang SQ. Did ECB Liquidity Injections Help the Real Economy?. 2017. Paper presented at 2017 Financial Management Association Asia/Pacific Conference, Taipei, Taiwan, Province of China.