Working Paper presents research work by both Danmarks Nationalbank’s employees and our partners. The series is primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.
Working Paper: Can Central Banks Boost Corporate Investment: Evidence from the ECB Liquidity Injections
Can monetary stimulus boost corporate investment? We answer this question by studying ECB's 2011-2012 Longer-Term Refinancing Operations (LTROs). While we find that the LTROs helped to decelerate the declined in Eurozone firms' investment our results also show that banks' use of LTRO funds is negatively associated with their clients' investment. Overall, the paper highlights the difficulty of boosting investment by injecting liquidity into the banking system.