We exploit the Eurosystem’s longer-term refinancing operations (LTROs) of 2011–2012 to assess whether a large provision of central bank liquidity to banks during a financial crisis has a positive impact on banks’ credit supply to firms. We control for credit demand by examining firms that borrow from several banks, in addition to controlling for confounding factors at the level of banks. We find that the LTROs enhanced loan supply: according to our baseline estimate, banks borrowing 1 billion euros from the facility increased their loan supply by 186 million euros over one year. We also find that the transmission mostly took place with the first operation of December 2011, in which banks that were more capital constrained bid more. Moreover, we show that the opportunity to substitute long-term central bank liquidity for short-term liquidity enhanced this transmission. Lastly, the operations benefited larger borrowers more and did not lead banks to increase their lending to riskier firms.

We exploit the Eurosystem's longer-term refinancing operations (LTROs) of 2011-2012 to analyze the effects that a large provision of central bank liquidity to banks has on the credit supply to firms. We control for credit demand by examining firms that borrow from several banks, in addition to controlling for banks' risk. We find that LTROs enhanced loan supply in France. Nevertheless, the transmission took place mostly with the first operation of December 2011, in which constrained banks bid more, and larger borrowers benefited more.The opportunity to substitute long-term central bank borrowing for short-term borrowing was instrumental in this transmission.

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This article uses variations in local conditions of the activity of the labor courts to assess the effect of dismissal costs on the labor market. Judicial activity is analyzed using a data set of individual labor disputes brought to French courts over the years 1996 to 2003. First, the authors present a simple theoretical framework helping us understand the links between litigation costs, judicial outcomes and firing costs. Second, the authors regress job flows on indicators of judicial outcomes, using an instrument, based on local shocks in the supply of lawyers. They find that when the numbers of lawyers increase, workers litigate more often, which should increase the firing costs for the firms. This increased filing rate causes a large decrease in employment fluctuations, especially for shrinking or exiting firms. The total effect on employment growth is slightly positive; this last result being more sensitive to the adopted specification. 7 Corresponding author: corinne.prost@insee.fr. +33 (0)1.41.17.60.67. Insee-15 bd Gabriel Péri, 92240 Malakoff, France. We are grateful to

We measure the impact of bank capital requirements on corporate borrowing and investment using loanE level data. The Basel II regulatory framework makes capital requirements vary across both banks and across firms, which allows us to control for firmE level credit demand shocks and bankE level credit supply shocks. We find that a 1 percentage point increase in capital requirements reduces lending by 10%. Firms can attenuate this reduction by substituting borrowing across banks, but only partially. The resulting reduction in borrowing capacity impacts investment, but not working capital: Fixed assets are reduced by 2.6%, but lending to customers is unaffected.