The Effects of Vast Liquidity Injections on Firms: An Empirical Investigation of the ECBs TLTROs

Carl Christian Brauch Henriquez de Luna

Student thesis: Master thesis


Among other policies, the ECB implemented in 2014 the Targeted Long Term Refinancing Operations. We study the extent to which these liquidity injections were passed on via participating banks and how those firms who were exposed to such banks reacted, more specifically small and medium sized enterprises in three Eurozone countries. Using more than 200,000 firmbank pairs, we estimate the effect of bank participation in the TLTROs on SMEs investments and leverage using a difference-in-differences methodology as well as exploiting the 7% allocation rule for the first TLTRO. We find little to no effect on capital expenditures and employee spending, while the leverage at SMEs directly exposed to participating banks was reduced in the case of TLTRO-II.

EducationsMSc in Advanced Economics and Finance, (Graduate Programme) Final Thesis
Publication date2020
Number of pages86
SupervisorsDaniel Streitz