ECB Corporate QE and the Loan Supply to Bank-Dependent Firms

Using a representative sample of euro-area businesses, we show that Eurosystem purchases of corporate bonds under the Corporate Sector Purchase Programme (CSPP) triggered a shift in bank loan supply in favor of firms that do not have access to bond-based financing. Identification comes from matching bank-dependent firms to their lenders and accounting for the effect of CSPP on banks' activity in the syndicated loan market. Credit access improved relatively more for firms borrowing from banks relatively more exposed to CSPP-eligible firms. This result applies regardless of bank balance sheet quality as measured by tier 1, NPL, and liquidity ratios.