euro area firms allow studying the determinants of the external finance premium at the country, bank, firm, and contract … variance. The rest is predominantly attributed to variances at the bank and firm levels, which are influenced by the respective … sheet vulnerabilities of banks and firms strengthen the transmission of policy measures to financing conditions. Moreover …

initial share of bond- relative to bank-based finance; this effect weakens, and may even reverse, in economies with a low … when bank lending contracts. …

Do borrowers demand less credit from banks with weak balance sheet positions? To answer this question we use novel bank …-specific survey data matched with confidential balance sheet information on a large set of euro area banks. We find that, following a … conventional monetary policy shock, bank balance sheet strength influences not only credit supply but also credit demand. The …

purchases of firms and a withdrawal of short term funds from banks, impacting firm financing costs directly via bond markets …, and indirectly via banks. According to our results, the spreads of corporate bonds held by investment funds increased …. Furthermore, an increase in the short term funding exposure of a bank to investment funds triggered a contraction in new loans to …

develops a simple analytical framework to study the impact of central bank policy-rate changes on banks' credit supply and risk …-taking incentives. Unobservable expost bank monitoring of loans creates an external-financing constraint, which determines bank leverage …. Unobservable, costly ex-ante screening of borrowers determines the level of bank risk-taking. More risk-taking tightens the …

bank liquidity induces a tightening impact on credit supply, as intended when central banks reduce their balance sheets …Exploiting the recalibration of ECB's outstanding central bank funding in 2022, we show that a sharp reabsorption of …. The tightening originates from the sudden relative convenience for banks accustomed to large liquidity holdings to more …

central bank asset purchases. The portfolio rebalancing frictions are calibrated to match the sovereign yield and exchange …