Repository logo
 
No Thumbnail Available
Publication

The ECB’s APP’s impact on non-financial firms’ cost of borrowing and debt choice

Use this identifier to reference this record.
Name:Description:Size:Format: 
114639087.pdf2.4 MBAdobe PDF Download

Advisor(s)

Abstract(s)

We examine the impact of the ECB’s asset purchase programmes on euro area non-financial firms’ cost of borrowing and their choice between corporate bonds and syndicated loans. Our findings indicate that the Corporate Sector Purchase Programme (CSPP) reduced spreads for both eligible and non-eligible corporate bonds, and that ECB purchases of covered bonds positively affected corporate bond spreads. The CSPP also compressed spreads across all syndicated loans, irrespective of eligibility. We find evidence supporting a “cost of borrowing channel” for covered bonds under the first programme and asset-backed securities, indicating that syndicated loan spreads reflect banks’ borrowing costs in the bond market. Additionally, our results reveal that the CSPP significantly influenced firms’ debt financing choices, with these effects being more pronounced for non-switchers.

Description

Keywords

Quantitative easing LSAP Credit spread Debt choice Bonds versus loans

Citation

Research Projects

Organizational Units

Journal Issue