The impact of monetary policy on the financing behaviour of firms in the Euro area and the UK

Abstract

According to the ‘broad credit view’ bank-dependent firms are more strongly affected by monetary contractions than firms with access to non-bank forms of external finance. Within the credit view the bank lending channel focuses on the special role of bank loans, and predicts that monetary contractions reduce loan supply to firms facing information problems. However, the ‘relationship lending channel’ argues that, especially in bank-based economies, bank-dependent firms have close ties with banks, which may reduce the sensitivity of their use of bank debt to monetary shocks. The sensitivity of corporate debt structures to changes in the monetary policy stance is analysed using a sample of 22,000 firms in the Euro area and the UK. Evidence is found for the credit view, the relationship lending channel, but not for the bank lending channel.     

货币政策、信贷渠道与资本结构

我国金融市场以银行体系为主,在企业融资研究中,考察货币政策的影响具有重要的现实意义。依据"信贷观"下的贷款渠道及信贷配给理论,分析表明,当货币政策变化影响到信贷供给时,未受约束企业的资本结构在政策紧缩时受影响较小,而受约束企业的杠杆率随着政策的紧缩(宽松)而减小(增大)。考察我国2003-2009年的非金融类上市公司的资本结构,在政策紧缩时经验证据与理论分析一致;但在政策宽松时资本结构的调整与"信贷观"并不一致,受约束企业的杠杆仍然较小,未受约束企业的权益及债务均较大。研究结论对于解释我国货币政策效应及企业融资决策,改进金融监管均具有重要的借鉴。     

The Trade Credit Channel of Monetary Policy Transmission: Evidence from Nonfinancial Manufacturing Firms in Turkey

This study investigates the trade credit channel of monetary policy transmission in Turkey by using a large panel of corporate firms and includes detailed information on balance sheets and income statements of firms that regularly reported to the Central Bank of the Republic of Turkey during the period 1996-2008. The study suggests that the composition of external finance differs considerably across firm types based on size and export performance under tight and loose financial conditions. Small and medium-size manufacturing firms and firms with a low export share are less likely to have access to bank finance, especially in tight periods. In addition, financially constrained firms with limited access to bank finance (small, low-export-share firms) tend to substitute trade credits for bank loans more aggressively in tight periods as monetary policy tightens. The large volume of trade credit on firms' balance sheets and its positive response to contractionary monetary shocks imply that the trade credit channel might subdue the traditional credit channel of monetary transmission.     

How successful are banking sector reforms in emerging market economies? Evidence from impact of monetary policy on levels and structures of firm debt in India

Many emerging markets have undertaken significant financial sector reforms, especially in their banking sectors, that are critical for both financial development and real economic activity. In this paper, we investigate the success of banking reforms in India where significant banking reforms were implemented during the 1990s. Using the argument that well-functioning credit markets would reflect a credit channel for monetary policy at work, we test whether a change in monetary policy has a predictable impact on borrowing behaviour of several types of firms, including business group affiliated, unaffiliated private firms, state-owned firms and foreign firms. The empirical results suggest that unaffiliated private firms have the most vulnerable to monetary policy stance during tight policy regimes. We also find that during tight monetary policy regimes, bank credit of smaller firms is more sensitive to changes in the interest rate than that of large firms. In an easy money regime, monetary policy and the associated change in interest rate does not affect change in bank credit, change in total debt and the proportion of bank credit in total debt for any of the firms. We discuss the policy implications of the findings.     

Credit rationing and non-price loan terms: A re-examination

This paper develops the implications of heterogeneous bank loans for borrower and lender behaviour in a competitive bank loan market by considering the own funds-loan ratio as the ‘non-price’ loan term. It is shown that in equilibrium each bank will ration its loan to borrowers by providing them with the smaller loan and requiring the higher own funds-loan ration than they would desire at the equilibrium loan rate. Moreover, restrictive monetary policy that raises the opportunity cost of granting loans decreases the loan size and increases the own funds-loan ratio, but its effect on the loan rate and credit rationing remains ambiguous. Thus credit rationing may decrease as a result of restrictive monetary policy.     

The impact of securitization on credit rationing: Empirical evidence

We study whether banks’ involvement into different types of securitization activity – asset backed securities (ABS) and covered bonds – in Spain influences credit supply before and during the financial crisis. While both ABS and covered bonds were hit by the crisis, the former were hit more severely. Employing a disequilibrium model to identify credit rationing, we find that firms with banks that were more involved in securitization see their credit constraints more relaxed in normal periods. In contrast, only greater covered bonds issuance reduces credit rationing during crisis periods whereas ABS aggravates these firms’ credit rationing in crisis periods. Our results are in line with the theoretical predictions that a securitization instrument that retains risk (covered bond) may induce a more prudent risk behavior of banks than an instrument that provides risk transferring (ABS).     

Do SMEs Benefit from Unconventional Monetary Policy and How? Microevidence from the Eurozone

We study the impact of the announcement of the European Central Bank's (ECB's) Outright Monetary Transactions Program on small firms’ access to finance using a matched firm‐bank data set from eight Eurozone countries. We find that following the announcement, credit access improved relatively more for firms borrowing from banks with high balance sheet exposures to impaired sovereign debt, with such firms less likely to be refused a loan or to be price rationed. Loan terms also improved as manifested by lengthening of loan maturities. Unconventional monetary policy has a positive impact on firms’ investment and profitability, while its effect on firm innovation is weaker.     

Access to Institutional Finance and the Use of Trade Credit

I develop a conceptual framework for analyzing the effect of the availability of institutional loans on firms' demand for supplier (trade) finance. I test for the existence of credit constraints and their effect on corporate financing policies. My empirical results support the hypothesis that trade credit is taken up by firms as a substitute for institutional finance at the margin when they are credit constrained. Further, in line with studies on the credit channel of monetary policy transmission, I find an increased reliance on trade credit by financially constrained firms during periods of tight money.     

Do Banks Affect the Level and Composition of Industrial Volatility?

In theory, better access to bank credit can reduce or increase output volatility depending on whether firms are more financially constrained during contractions or expansions. This paper finds that the volatility of industrial output is lower in countries with more bank credit. Most of the reduction in volatility is idiosyncratic, which follows from the ability of banks to pool and diversify shocks. Systematic volatility is reduced less strongly. Volatility dampening is achieved via countercyclical borrowing: At the firm level, short‐term borrowing is less (or more negatively) correlated with sales and inventories in countries with high levels of bank credit.     

劳动力成本与中小企业融资约束

本文利用世界银行提供的中国企业调查数据,基于信贷配给理论,考察劳动力成本对企业融资约束的影响。分别以劳动力成本占企业总成本的比重和劳动力成本相对于企业销售额的比值作为劳动力成本代理指标,通过考察企业是否需要银行贷款的自主决策与贷款可得性两方面信息,甄别企业受到的不同类型的信贷配给,进而系统考察劳动力成本对企业信贷约束的影响。研究发现:第一,劳动力成本显著地提高了企业受到信贷配给约束的概率,信贷对劳动力成本较高的企业具有明显的“筛选效应”;第二,劳动力成本对企业受到银行信贷配给和自我信贷配给约束的概率均有显著的正向影响,说明劳动力成本较高的企业不仅会受到更高的来自银行的信贷约束,还会受到来自自身的信贷约束,形成双重“筛选效应”;第三,机制分析表明,较高的金融发展程度和市场化水平通过减轻信息不对称问题,能够显著缓解“筛选效应”的不利影响。本研究为深化金融供给侧结构性改革、破解企业融资难题提供了新的政策启示。     

Access to external finance: Theory and evidence on the impact of monetary policy and firm-specific characteristics

This paper examines firms’ access to bank and market finance when allowance is made for differences in firm-specific characteristics. A theoretical model determines the characteristics such as size, risk and debt that would determine firms’ access to bank or market finance; these characteristics can result in greater (or lesser) tightening of credit when interest rates increase. An empirical evaluation of the predictions of the model is conducted on a large panel of UK manufacturing firms. We confirm that small, young and risky firms are more significantly affected by tight monetary conditions than large, old and secure firms.     

The Credit Channel at the Zero Lower Bound through the Lens of Equity Prices

This study examines the impact of unconventional monetary policies on the stock market when the short‐term nominal interest rate is stuck at the zero lower bound (ZLB). Unconventional monetary policies appear to have significant effects on stock prices and the effects differ across stocks. In agreement with existing credit channel theories, I find that firms subject to financial constraints react more strongly to unconventional monetary policy shocks [especially large‐scale asset purchases (LSAPs)] than do less constrained firms. These results imply that the credit channel is as important as the interest rate channel in the transmission of unconventional monetary policies at the ZLB.     

Exchange rate pass-through and credit constraints

The macroeconomic evidence of the short-term impact of exchange rates on exports and prices is notoriously weak. This paper examines the microfoundations of this disconnect. I study the response of firms' export and price setting decisions to fluctuations in exchange rates and credit conditions using firm-level survey data. Financially constrained firms pass through exchange rate changes to prices at almost twice the rate of unconstrained firms. Similarly, their export volumes are about twice as sensitive to exchange rate fluctuations. The effect of borrowing constraints is particularly strong during the recent financial crisis.     

The impact of bank regulation on the cost of credit: Evidence from a discontinuity in capital requirements

We study the effect on credit relationships of the Small and Medium Enterprises Supporting Factor (SME-SF), a regulatory risk weight reduction on small loans to SMEs. Employing a regression discontinuity design and matched bank-firm data from Italy, we find that a 1 percent drop in capital requirements causes an average 13 basis points reduction in the cost of credit. Moreover, with a novel measure of bank regulatory capital scarcity, we show that the drop is larger for banks facing tighter constraints. Furthermore, the drop is larger for firms with low switching costs, while the sharp assignment rule may have led to the rationing of marginal borrowers. Such findings indicate that the entire distribution of firms and banks’ characteristics plays a crucial role in determining the impact of regulatory capital changes.     

The role of loan guarantee schemes in alleviating credit rationing in the UK

It is a widely held perception, although empirically contentious, that credit rationing is an important phenomenon in the UK small business sector. In response to this perception the UK government initiated a loan guarantee scheme (SFLGS) in 1981. In this paper we use a unique dataset comprised of small firms facing a very real, and binding, credit constraint, to question whether a corrective scheme such as the SFLGS has, in practice, alleviated such constraints by promoting access to debt finance for small credit constrained firms. The results broadly support the view that the SFLGS has fulfilled its primary objective.     

Financial constraints and stock returns

We test whether the impact of financial constraints on firmvalue is observable in stock returns. We form portfolios offirms based on observable characteristics related to financialconstraints and test for common variation in stock returns.Financially constrained firms' stock returns move together overtime, suggesting that constrained firms are subject to commonshocks. Constrained firms have low average stock returns inour 1968-1997 sample of growing manufacturing firms. We findno evidence that the relative performance of constrained firmsreflects monetary policy, credit conditions, or business cycles.     

货币政策在银行危机管理中的效果

本文从货币政策的信贷传导渠道出发,探讨了金融危机条件下商业银行资本管理、准备金需求的变化、信贷配给对货币政策有效性的影响机制。分析表明,货币政策的有效性不仅取决于中央银行的政策意图,还受制于商业银行资本量、风险偏好以及信贷配给程度的变化。因此,强化危机时期的货币政策效果必须配合影响银行信贷行为的措施。     

劳动力成本与中小企业融资约束

本文利用世界银行提供的中国企业调查数据,基于信贷配给理论,考察劳动力成本对企业融资约束的影响。分别以劳动力成本占企业总成本的比重和劳动力成本相对于企业销售额的比值作为劳动力成本代理指标,通过考察企业是否需要银行贷款的自主决策与贷款可得性两方面信息,甄别企业受到的不同类型的信贷配给,进而系统考察劳动力成本对企业信贷约束的影响。研究发现:第一,劳动力成本显著地提高了企业受到信贷配给约束的概率,信贷对劳动力成本较高的企业具有明显的“筛选效应”;第二,劳动力成本对企业受到银行信贷配给和自我信贷配给约束的概率均有显著的正向影响,说明劳动力成本较高的企业不仅会受到更高的来自银行的信贷约束,还会受到来自自身的信贷约束,形成双重“筛选效应”;第三,机制分析表明,较高的金融发展程度和市场化水平通过减轻信息不对称问题,能够显著缓解“筛选效应”的不利影响。本研究为深化金融供给侧结构性改革、破解企业融资难题提供了新的政策启示。     

Emerging market corporate leverage and global financial conditions

This paper explores how global financial conditions influence corporate leverage growth in emerging markets (EMs). Using a sample of 800,000 listed and non-listed firms across 28 EMs, we find that accommodative global financial conditions—initially proxied with a measure of U.S. monetary policy—are associated with faster leverage growth. The impact is more pronounced for financially constrained firms, such as small- and medium-sized enterprises (SMEs), and for EMs whose domestic monetary policy is more aligned with that of the United States. The findings suggest that global financial conditions affect EM firms' leverage growth by influencing domestic interest rates and by relaxing corporate borrowing constraints. Finally, leverage increases disproportionately more for firms that are either relatively less profitable or less solvent when global financial conditions become looser.     

定向降准、贷款可得性与小微企业商业信用——基于断点回归的经验证据

小微企业在我国经济发展中起到了重要作用,但由于长期面临融资约束问题,使其不得不诉诸非正式制度(如商业信用)来缓解融资困难。党的十九届五中全会明确提出,支持小微企业成长为创新重要发源地,完善促进小微企业发展的政策体系。其中,实施“精准滴灌”式的货币政策,对小微企业成长尤为重要,是金融服务实体经济的必然要求。我国央行的定向降准政策激励银行向小微企业提供贷款,有利于疏通小微企业通过正式制度(如银行贷款)进行融资的渠道。本文基于定向降准这一自然实验,采用断点回归设计,评估贷款可得性对小微企业商业信用的影响。研究发现:第一,正式制度对于非正式制度存在明显的替代效应,即小微企业贷款可得性上升以后,对商业信用的需求显著下降。第二,不同的模型设定与稳健性检验,均得到一致的结论。第三,贷款可得性提高对小微企业商业信用的影响因企业异质性而有所差异。本文研究为银行贷款与商业信用之间的替代关系提供了来自中国小微企业的证据,有助于理解定向降准政策对小微企业融资决策的影响,为扶持小微企业发展的政策制定提供参考。