Financial conditions and economic activity: the potential impact of the targeted long-term refinancing operations (TLTROs)

Balfoussia, Hiona; Gibson, Heather D.

doi:10.1080/13504851.2015.1080799

Cited by 19 publications

(16 citation statements)

References 10 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Indeed our findings, in line with those of Balfoussia and Gibson (2016), suggest that the rationale underlying programs such as the ECB's "Targeted Long Term…”

Section: Policy Implicationssupporting

confidence: 87%

“…Our paper builds on Angelopoulou, Balfoussia and Gibson (2014) and Balfoussia and Gibson (2016) who construct and employ this financial conditions index to explore the real macroeconomic effects of changes in credit conditions. They report inter alia a significant causal relationship between easing financial conditions and aggregate investment in the euro area.…”

Section: Iii) Research Developments Since the Financial Crisismentioning

confidence: 99%

“…The present study follows on, exploring the aforementioned relationship at the micro level. We relate the same financial conditions index to firm-level data on investment, in order to gain further insight as to how the effect on aggregate investment reported in Balfoussia and Gibson (2016) comes about. In doing so, we are able to study in some detail the impact of economywide supply-side financial factors on firm-level investment decisions.…”

Section: Iii) Research Developments Since the Financial Crisismentioning

confidence: 99%

See 2 more Smart Citations

Firm investment and financial conditions in the euro area: evidence from firm-level data

Balfoussia¹,

Gibson²

2018

Applied Economics Letters

Self Cite

View full text Add to dashboard Cite

We explore whether the sensitivity of firm-level investment to cash-flow, typically associated with an external financing premium, is time-varying and in particular whether it varies with overall financial conditions. We find that financial conditions have indeed played a significant role in corporate investment decisions over recent years, rendering financing constraints even more binding. This finding appears to be robust to a number of control variables and robustness tests. Moreover, the impact of credit conditions is not uniform across firms, but rather it varies depending on firm size and leverage, with constrained firms being substantially more likely to condition their investment decisions on overall credit conditions. Our results cast new light on the interplay between financial and real cycle downturns and underline the need for monetary, fiscal and macroprudential policy to be countercyclical with respect to financial conditions.

show abstract

“…Indeed our findings, in line with those of Balfoussia and Gibson (2016), suggest that the rationale underlying programs such as the ECB's "Targeted Long Term…”

Section: Policy Implicationssupporting

confidence: 87%

Section: Iii) Research Developments Since the Financial Crisismentioning

confidence: 99%

Section: Iii) Research Developments Since the Financial Crisismentioning

confidence: 99%

See 1 more Smart Citation

Firm investment and financial conditions in the euro area: evidence from firm-level data

Balfoussia¹,

Gibson²

2018

Applied Economics Letters

Self Cite

View full text Add to dashboard Cite

show abstract

“…Nonetheless, there are some papers that estimate the effects of these operations for the Euro area and for specific countries. For instance, Balfoussia and Gibson (2015) conclude that there is a significant impact of the TLTRO on the real economy activity, both for the Euro area as a whole and for the specific case of Greece, via an easing of the financial conditions, affecting several real economy indicators, verified as positive and significant, and possibly resulting in an overall economic growth increase. The authors used a financial conditions index (FCI) developed by Angelopoulou, Balfoussia, and Gibson (2013), which includes a wide range of prices, quantities, spreads and survey data, in line with the economic theory followed by the authors, combined with a VAR framework, in order to estimate the potential impact of TLTRO on several economic activity aspects.…”

Section: Literaturementioning

confidence: 99%

The transmission of unconventional monetary policy to bank credit supply: Evidence from the TLTRO

Afonso

Sousa-Leite

2020

The Manchester School

View full text Add to dashboard Cite

The 2008-2009 Global Financial Crisis (GFC) forced the major Central Banks to implement a set of unconventional monetary policy measures, assumed to have a temporary character (Mishkin, 2011; Roman & Purcel, 2014; Trichet, 2011). These unprecedented measures were aimed at restoring the stability of the financial markets and the correct functioning of the monetary policy transmission mechanism and consisted of liquidity injections via credit refinancing operations at low interest rates, asset purchases from the market in order to lower interest rates, the reduction of monetary policy

show abstract

“…the risk of parameter instability resulting from the inclusion of too many variables in the VAR. Moreover the FCI might be particularly useful in forecasting macroeconomic variables, especially during episodes of financial distress (Alessandri and Mumtaz, 2017), or in assessing the impact of unconventional monetary policy on real economic activity (Balfoussia and Gibson, 2015).…”

Section: Introductionmentioning

confidence: 99%

A Financial Conditions Index for the CEE Economies

Auer

2017

SSRN Journal

View full text Add to dashboard Cite

Financial Conditions Indexes (FCIs) are analytical tools devised to synthesize the information contained in a set of financial variables in order to identify how financial conditions affect economic activity. In this paper, for each of the three main Central and Eastern EU member states outside the euro area (Hungary, Poland and the Czech Republic) an FCI is constructed as an unobserved factor estimated using the EM algorithm. After having assessed their performance in providing information about future economic activity (both insample and out-of-sample), these FCIs are used to describe the evolution of financial conditions in the three economies between 2001 and 2016. The overall findings of this study support a narrative whereby all three economies, after their integration into the EU, enjoyed very accommodative financial conditions until 2008; the Czech Republic and Hungary subsequently turned out to have been more exposed than Poland to the spillover effects from both the global financial crisis and euro sovereign debt crisis.

show abstract

Financial conditions and economic activity: the potential impact of the targeted long-term refinancing operations (TLTROs)

Cited by 19 publications

References 10 publications

Firm investment and financial conditions in the euro area: evidence from firm-level data

Firm investment and financial conditions in the euro area: evidence from firm-level data

The transmission of unconventional monetary policy to bank credit supply: Evidence from the TLTRO

A Financial Conditions Index for the CEE Economies

Contact Info

Product

Resources

About