Research articles for the 2019-06-18

Can Google Econometrics Predict Unemployment? Evidence From Spain
González-Fernández, Marcos,González-Velasco, Carmen
The aim of the paper is to analyze the ability of internet activity, what has been called Google econometrics, to predict unemployment in Spain. We include a new predictor for Spanish unemployment based on internet information provided by Google Trends. Using monthly data from January 2004 to November 2017 we found evidence of a high correlation between internet queries and unemployment. Besides that, the inclusion of internet activity enhances model’s prediction performance.

Compound Poisson Models for Financial Networks
Gandy, Axel,Veraart, Luitgard A. M.
We introduce a modelling framework for financial networks based on the compound Poisson distribution. This is motivated by the fact that financial networks are usually the aggregates of individual trades between institutions and a compound Poisson distribution mimics this. As financial networks are typically heterogeneous, we suggest to use a regression approach to model key characteristics of the compound Poisson distribution and to account for this heterogeneity. We show how the new model class can reproduce stylised facts of financial networks. We test the new modelling framework on two types of empirical network data: First we consider networks that represent exposures based on a special type of financial derivatives, namely Credit Default Swaps. Second we consider data from the locational banking statistics available from the Bank for International Settlements. From these data we can construct networks that represent cross-border liabilities of financial institutions aggregated on the country level and hence represent a global liabilities network. For both types of financial networks we find that compound Poisson distributions with regression fit the data well. As an application of the framework we show how it can be used for predicting unobserved edges (including their weights) in a network in which some parts of the edges are observed and other parts are not observed. This is relevant for assessing systemic risk in financial networks that are not fully observable.

Credit Bubbles in Arbitrage Markets: The Geometric Arbitrage Approach to Credit Risk
Simone Farinelli,Hideyuki Takada

We apply Geometric Arbitrage Theory to obtain results in mathematical finance for credit markets, which do not need stochastic differential geometry in their formulation. We obtain closed form equations involving default intensities and loss given defaults characterizing the no-free-lunch-with-vanishing-risk condition for corporate bonds, as well as the generic dynamics for credit market allowing for arbitrage possibilities. Moreover, arbitrage credit bubbles for both base credit assets and credit derivatives are explicitly computed for the market dynamics minimizing the arbitrage.

Do Interest Rate Controls Work? Evidence from Kenya
Alper, C. Emre,Clements, Benedict ,Hobdari, Niko,Porcel, Rafel Moyà
This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016. The intent of the controls was to reduce the cost of borrowing, expand access to credit, and increase the return on savings. However, we find that the law on interest rate controls has had the opposite effect of what was intended. Specifically, it has led to a collapse of credit to micro, small, and medium enterprises; shrinking of the loan book of the small banks; and reduced financial intermediation. We also show that interest rate caps reduced the signaling effects of monetary policy. These suggest that (i) the adverse effects could largely be avoided if the ceiling was high enough to facilitate lending to higher risk borrowers; and (ii) alternative policies could be preferable to address concerns about the high cost of credit.

Does Innovative Effort Matter for Corporate Performance in Spanish Companies in a Context of Financial Crisis? A Fuzzy-Set QCA Approach
González-Velasco, Carmen,González-Fernández, Marcos,Fanjul-Suárez, José Luis
The aim of this paper is to examine whether innovative effort is a key driver of the financial performance of a set of 3860 Spanish companies in a context of financial crisis. For this purpose, we use contrarian case analysis and configural analysis using fuzzy-set qualitative comparative analysis to test themain tenets of complexity theory:(1) innovative effort, as a single antecedent condition, is not a sufficient or necessary factor of a high score in corporate performance; (2) a few possible configurations lead to high corporate performance (equifinality principle); (3) contrarian cases occur; and (4) causal configurations for high scores for corporate performance are not the mirror opposites of causal configurations for low scores for corporate performance (causal asymmetry principle). The findings suggest that innovative effort, as a single antecedent condition, is not a sufficient or necessary factor for a high score in corporate performance.

ESG Review, Powerpoint Slides
Homanen, Mikael
These slides are a compilation of academic articles that deal with the “Good” and “Bad” sides of finance. These slides were originally used for a presentation on “Finance and Corporate Social Responsibility â€" A Review on Literature” and since then have developed to include a range of papers from environmental economics, ethical banking, natural disaster finance, experimental economics, social capital, tax evasion, corruption and much more. There are currently over 500 slides and articles are organized according to their respective subfields. These slides are continuously updated and are meant as a helpful tool for the review of literature and not for the endorsement of any specific articles. It is to my understanding the most comprehensive review surrounding such a diverse set of important yet interconnected topics. All errors are my own.

Equilibrium Asset Pricing with Transaction Costs
Martin Herdegen,Johannes Muhle-Karbe,Dylan Possamaï

We study risk-sharing economies where heterogenous agents trade subject to quadratic transaction costs. The corresponding equilibrium asset prices and trading strategies are characterised by a system of nonlinear, fully-coupled forward-backward stochastic differential equations. We show that a unique solution generally exists provided that the agents' preferences are sufficiently similar. In a benchmark specification with linear state dynamics, the illiquidity discounts and liquidity premia observed empirically correspond to a positive relationship between transaction costs and volatility.

How Do Corporate Political Connections Influence Financial Reporting? A Theory-Building Review of the Literature
Koenigsgruber, Roland,Preuss, Susanne
A large stream of research has analyzed the effects of corporate political connections on firms, including first evidence on their effects on financial reporting behavior. However, the evidence is ambiguous and attempts to explain the causality of effects on reporting are limited. In this manuscript, we present the results of a systematic review of the literature of corporate political connections. We draw on findings in the accounting, finance and economics literature and derive a theoretical framework that identifies four channels through which corporate political connections affect financial reporting. We furthermore identify seven distinct types of political connectedness and discuss their interrelations and the proxies used in the literature to measure them.

How Enhancing Gender Inclusion Affects Inequality: Thresholds of Complementary Policies for Sustainable Development
Asongu, Simplice,Odhiambo, Nicholas
This study investigates how enhancing gender inclusion affects inequality in 42 African countries for the period 2004-2014. The empirical evidence is based on the Generalized Method of Moments. Three inequality indicators are used, namely, the: Gini coefficient, Atkinson index, and Palma ratio. The two gender inclusion measurements used include female labour force participation and female employment. The following main findings are established. There are positive net effects on inequality from the enhancement of gender inclusion dynamics. An extended threshold analysis is used to assess critical masses at which further increasing gender inclusion enhances inequality. The established thresholds are: (i) 55.555 “employment to population ratio, 15+, female (%)”for the nexus with the Gini coefficient. (ii) 50 “labor force participation rate, female (% of female population ages 15+)” and between 50 to 55 “employment to population ratio, 15+, female (%)”, for the Atkinson index. (iii) 61.87 “labor force participation rate, female (% of female population ages 15+)” for the Palma ratio.These established thresholds are worthwhile for sustainable development because, beyond the critical masses, policy makers should complement the gender inclusion policy with other measures designed to reduce income inequality. Some complementary measures that can be taken on board beyond the established thresholds could focus on enhancing, inter alia: information and communication technology, infrastructural development; financial inclusion and inclusive education.

Identification Bias in Predictive Regressions
Hamidi Sahneh, Mehdi
This paper points out an identification problem in predictive regressions, inducing an upward bias in the return coefficient's estimator, it's t-statistic and R-squared. Using analytical formulas and Monte Carlo simulations, I demonstrate that identification bias is quantitatively important, and does not disappear even asymptotically. I reconcile my findings with the literature that finds stronger long-horizon predictability and excess volatility. Using a new bootstrap procedure, I show that identification problem affects both in-sample and out-of-sample inference in practice.

Implied Volatility Changes and Corporate Bond Returns
Cao, Jie,Goyal, Amit,Xiao, Xiao,Zhan, Xintong
Option implied volatility change has significant cross-sectional predictive power for the underlying firms’ bond returns. Corporate bonds with large increases in implied volatilities over the past month underperform those with large decreases in implied volatilities by approximately 0.6% per month. The results are robust to various bond characteristics and volatility related variables, as well as to stock and bond factor models. Our results are consistent with the notion that informed traders with new information about default risk prefer to trade in the option market, and that the corporate bond market is slow in incorporating that information.

Information Environments and High Price Impact Trades: Implication for Volatility and Price Efficiency
Dionne, Georges,Zhou, Xiaozhou
Using high-frequency transaction and Limit Order Book (LOB) data, we extend the identification dimensions of High Price Impact Trades (HPITs) by using LOB matchedness. HPITs are trades associated with disproportionately large price changes relative to their proportion of volume. We nd that a higher presence of HPITs leads to a decline in volatility due to more contrarian trades against uninformed traders, but this decline varies with information environments and liquidity levels. Further, we show that more HPITs lead to higher price eciency for stocks with greater public disclosure and higher liquidity. Our empirical results provide evidence that HPITs mainly reect fundamental-based information in a high public information environment, and belief-based information in a low public information environment.

Innovation and Corporate Performance in the Spanish Regions
González-Fernández, Marcos,González-Velasco, Carmen
This paper analyzes the relationship between corporate performance and innovative effort for a set ofSpanish companies during the 2007â€"2013 period. For this purpose, we use a panel data model. We findevidence that the return on equity (ROE) and, in particular, sales revenues are positively influenced bycorporate innovation. Moreover, we also find evidence that this positive relationship is stronger in largecompanies. The analysis regarding the age of the company indicates that, in start-ups or younger companies,innovation effort has a greater effect on corporate performance than in older companies.

Machine Learning With Kernels for Portfolio Valuation and Risk Management
Boudabsa, Lotfi,Filipović, Damir
We introduce a computational framework for dynamic portfolio valuation and risk management building on machine learning with kernels. We learn the replicating martingale of a portfolio from a finite sample of its terminal cumulative cash flow. The learned replicating martingale is given in closed form thanks to a suitable choice of the kernel. We develop an asymptotic theory and prove convergence and a central limit theorem. We also derive finite sample error bounds and concentration inequalities. Numerical examples show good results for a relatively small training sample size.

Monitoring the Monitors: Auditors, Corporate Theft, and Corruption
Mironov, Maxim
Using a unique database of banking transactions, I examine the relationship between auditing and income diversion in a sample of 25,824 companies. In contrast to the other studies, my methodology enables me to accurately measure corporate theft and to observe the fees charged by auditors, which are not available to the public. I find that Big 4 auditors receive higher audit and non-audit fees when their clients transfer more money to fraudulent entities. A 1 standard deviation increase in income diversion corresponds to a 9.2% increase in audit fees and a 24.8% increase in other fees. I find that this relationship is partially explained by the auditors’ propensity to corrupt. The relationship between audit fees and income diversion is 3 times stronger for Big 4 auditing firms with senior employees who have a high propensity to corrupt than for Big 4 firms with senior employees with a low propensity to corrupt. In addition, I find that Big 4 employees with high propensity to corrupt receive much higher annual salary increases than do their less corrupt colleagues. A 1 standard deviation in PTC corresponds to a 4-8.3% increase in annual salary. Finally, I find that firms that are audited by the Big 4 benefit from a lower cost of capital, which motivates clients to choose reputable auditors, even if such auditors constrain income diversion. This study contributes to our understanding of the relationship between auditing and corporate theft, and it is relevant to large swathes of the (non-OECD) global economy.

Multiscale cross--correlations and triangular arbitrage opportunities in the Forex
Robert Gębarowski,Paweł Oświęcimka,Marcin Wątorek,Stanisław Drożdż

Multifractal Detrended Cross-Correlation methodology is applied to the foreign exchange (Forex) market. High frequency fluctuations of exchange rates of eight major world currencies over the period 2010--2018 are used to study cross-correlations. The currencies include the Australian dollar, Canadian dollar, Swiss franc, euro, British pound sterling, Japanese yen, New Zealand dollar and US dollar. Dominant multiscale cross--correlations between the exchange rates are found to typically occur on the level of small and medium size fluctuations. Hierarchical organization of ties between the exchange rates, formulated in terms of the dendrograms, are however more pronounced on the level of larger fluctuations. The cross--correlations are quantified to be stronger on average between those exchange rate pairs that are bound within triangular relation. Some pairs from outside the triangular relation are however identified to be exceptionally strongly correlated as compared to the average strength of correlations in this sector. This in particular applies to those exchange rates that involve the Australian and New Zealand dollars and reflects their economic relations. Significant events with impact on the Forex are shown to induce triangular arbitrage opportunities which at the same time reduce cross--correlations on the smallest time scales and act destructively on the multiscale organization of correlations. In the years 2010--2018 such instances took place in connection with the Swiss National Bank intervention and the weakening of British pound sterling accompanying the initiation of Brexit procedure.

Nash equilibrium for risk-averse investors in a market impact game with transient price impact
Xiangge Luo,Alexander Schied

We consider a market impact game for $n$ risk-averse agents that are competing in a market model with linear transient price impact and additional transaction costs. For both finite and infinite time horizons, the agents aim to minimize a mean-variance functional of their costs or to maximize the expected exponential utility of their revenues. We give explicit representations for corresponding Nash equilibria and prove uniqueness in the case of mean-variance optimization. A qualitative analysis of these Nash equilibria is conducted by means of numerical analysis.

Obligación de información y asimetrías de información en el mercado bancario (The Obligation of Information and Information Asymmetries in the Colombian Banking Market)
Devis Cantillo, Juliana ,Gómez, Pilar ,Lopez Ponton, Erika
Spanish Abstract: Las asimetrías de información requieren la intervención del Estado para regular los contratos. En Colombia se creó la ley de Habeas Data para manejar los conflictos derivados de la asimetría de información entre usuarios y entidades fi-nancieras. No obstante, la capacidad de este instrumento jurídico para resolver esta imperfección es limitada, como muestran los resultados de este artículo, basados en una revisión exhaustiva de sentencias de la Corte Constitucional.English Abstract: The information asymmetry increases the transaction costs. This fact calls the State’s regulation on the contracts developed by the market’s agents in order to get efficient results. In Colombia, the Habeas Data law was created to manage conflicts arising from the asymmetry of information between users and financial entities. However, its ability to solve this market’s imperfection in the banking sector is still limited. In this article, we present results that validate the previous statement based on the analysis of this legal instrument, retaking concepts of the “Law and Economics” and a comprehensive review of Constitutional Court decisions.

On the Efficiency of Mandatory Retirement Savings Under Endogenous Borrowing Constraints
Pardo, Oliver
Mandatory contributions to retirement savings accounts may tighten existing borrowing constraints, forcing individuals to forgo profitable investment options. This welfare-detrimental effect can be offset if retirement savings are allowed to serve as collateral. Moreover, some credit market imperfections may disappear altogether if this later policy is combined with a pension system with unconditional basic savings.

Option Trading and Stock Price Informativeness
Cao, Jie,Goyal, Amit,Ke, Sai,Zhan, Xintong
We examine the impact of single-name option trading on stock price informativeness. By documenting a robust relation and establishing causality, we confirm that option trading causes the stock price to incorporate more firm-specific information. Our findings are through the channels of investors’ acquiring more information and through managers’ voluntary release. The findings are driven by firms with higher information asymmetry and firms with more efficiently priced options.

Role of Financial Reporting and Auditing in Disciplining CEOs: Evidence from Goodwill Impairments
Ghosh, Al (Aloke),Hovakimian, Armen,Hu, Huajing
According to accounting and auditing standards, external auditors and management must both independently monitor goodwill balance for any impairment. Therefore, goodwill impairment may contain valuable incremental information about the CEO’s ability which the board can utilize for CEO retention decisions. Consistent with this expectation, we find goodwill impairments lead to a large jump in subsequent CEO turnover. The turnover-impairment relationship varies with CEO power, auditor quality, accounting performance, and CEO-age and the information in goodwill impairment is incremental to the announcement period stock returns. Our analyses suggest that boards utilize the negative information in goodwill impairment in one of two ways. In the more severe cases, the incumbent CEO is dismissed; in other cases, their equity compensation is reduced which suggests that retention and pay act as alternative disciplining mechanisms. Our study highlights how the intersection of financial reporting and auditing can generate valuable information in disciplining CEOs.

Shareholder Litigation and Readability in Financial Disclosures: Evidence from a Natural Experiment
Ganguly, Abhi,Ganguly, Arup,Ge, Lin,Zutter, Chad J.
We examine the causal impact of the threat of shareholder litigation on the linguistic complexity of corporate disclosures in form 10-Ks in a shock-based research design. Using the Ninth Circuit Court of Appeals ruling, Re: Silicon Graphics Inc., of 1999, that led to an unexpected and sudden reduction in the threat of litigation for firms headquartered only in the Ninth Circuit, and difference-in-differences empirical set-up, we find that as compared to the propensity score-matched peer firms that were not headquartered in the Ninth Circuit, the treated firms i.e., the Ninth Circuit firms, significantly improved the readability in their financial disclosures after this ruling. Such results are robust to different linguistic complexity measures, matching techniques, empirical specifications, and multidimensional fixed effects that control for both the time-invariant and time-varying unobservable confounders, and are consistent with theoretical models in firm disclosure that predict a negative causal link between the threat of shareholder class action litigations and transparency in disclosures.

The Common Ownership Boom - Or: How I Learned to Start Worrying and Love Antitrust
Tzanaki, Anna
Is common ownership the Doomsday Machine for the operation of free markets, competition and capitalism as we know it? An observer of cutting-edge law and economics literature may indeed tend to believe that we are approaching a point of ultimate antitrust apocalypse. This article tries to unfold the ongoing antitrust-focused debate by exploring a series of questions: i) who is a common owner; ii) what are the negative externalities of common ownership; iii) which are the potential anticompetitive mechanisms and theories of harm; iv) what are the appropriate legal solutions to any competition concerns. While there is so much we do not know, common ownership forces us, with some urgency, to revisit and review whether our existing antitrust tools, methods and policies are well fit for purpose.

The Effects of Non-Big 4 Mergers on Audit Efficiency and Audit Market Competition
Kitto, Andrew
Regulators and economists are often concerned with mergers and acquisitions (M&A) because of their potential to reduce competition by decreasing the number of suppliers and consolidating market share. However, Stigler (1955) points out that in certain situations, mergers may increase competition even when they raise concentration and reduce an already small number of suppliers. This situation may arise when smaller firms are relatively inefficient and can only reasonably compete with larger rivals by merging. In this study, I examine whether mergers between small and midsize accounting firms influence audit market competition by increasing the number of firms that can efficiently compete for public clients. Using a proprietary dataset provided by the PCAOB, I find evidence that in-market mergers (involving auditors that operate in the same geographic market) generate efficiencies that are reflected in a post- merger reduction in audit hours but not audit quality. Mergers benefit clients because cost-savings are passed on to clients in the form of lower prices rather than captured as economic rents. In contrast, I find no evidence of efficiencies resulting from out-of-market mergers, suggesting that it may be difficult to create synergies when auditors do not have overlapping operations. Collectively, these findings suggest that in-market mergers create efficiencies and bring new aggressive competition to the U.S. public- company audit market.

The Impact of Ambiguity on the Optimal Exercise Timing of Integral Option Contracts
Luis H. R. Alvarez E.,Sören Christensen

We consider the impact of ambiguity on the optimal timing of a class of two-dimensional integral option contracts when the exercise payoff is a positively homogeneous measurable function. Hence, the considered class of exercise payoffs includes discontinuous functions as well. We identify a parameterized family of excessive functions generating an appropriate class of supermartingales for the considered problems and then express the value of the optimal policy as well as the worst case measure in terms of these processes. The advantage of our approach is that it reduces the analysis of the multidimensional problem to the analysis of an ordinary one-dimensional static optimization problem. In that way it simplifies earlier treatments of the problem without ambiguity considerably. We also illustrate our findings in explicitly parameterized examples.

The Role of Market Definition in Assessing Anti-Competitive Harm in Ohio v. American Express
Evans, David S.,Schmalensee, Richard
This article shows that the Supreme Court reached the right outcome in Ohio et al. v. American Express. The District Court had found that American Express was a two-sided transaction platform that provided joint services simultaneously to cardholders and merchants. But it then chose, by adopting a single-sided merchant services market, to analyze the effect of the anti-steering provisions at issue solely on one side of these simultaneous transactions. That decision appears to have prevented the lower court from seeing that the plaintiffs’ evidence of anticompetitive harm to merchants was weak. The District Court also decided that case law prevented it from considering the effect of the conduct on the other half of the transactions even at the second-stage of the rule of reason. The Supreme Court did not discuss the limitations of the plaintiffs’ theory and evidence at length but simply and properly found that the plaintiffs had failed to prove antitrust injury to platform competition for transactions. This article also shows that criticisms of the Supreme Court decision seem to be based on the rejection or misunderstanding of the economics literature on multi-sided platforms on which the District Court, the Appeals Court, and the Supreme Court all relied.

Unconventional Exchange: Methods for Statistical Analysis of Virtual Goods
Oliver James Scholten,Peter Cowling,Kenneth A. Hawick,James Alfred Walker

Hyperinflation and price volatility in virtual economies has the potential to reduce player satisfaction and decrease developer revenue. This paper describes intuitive analytical methods for monitoring volatility and inflation in virtual economies, with worked examples on the increasingly popular multiplayer game Old School Runescape. Analytical methods drawn from mainstream financial literature are outlined and applied in order to present a high level overview of virtual economic activity of 3467 price series over 180 trading days. Six-monthly volume data for the top 100 most traded items is also used both for monitoring and value estimation, giving a conservative estimate of exchange trading volume of over {\pounds}60m in real value. Our worked examples show results from a well functioning virtual economy to act as a benchmark for future work. This work contributes to the growing field of virtual economics and game development, describing how data transformations and statistical tests can be used to improve virtual economic design and analysis, with applications in real-time monitoring systems.

Unintended Consequences of Post-Crisis Liquidity Regulation
Sundaresan, Suresh M.,Xiao, Kairong
We evaluate the effects of the post-crisis liquidity regulations on the U.S. banking system. Although the new regulations have increased the liquidity buffer held by banks, a significant fraction of the buffer is financed by short-term debt intermediated by a government-sponsored enterprise known as the Federal Home Loan Bank System. Using a model of liquidity regulation, we show that funding a liquidity buffer using government-backed short-term debt compromises the goals of liquidity regulation. Instead of reducing banks' reliance on public liquidity, banks now regularly borrow from a public liquidity backstop. Moreover, the liquidity buffer financed by short-term debt may disappear in times of crisis, making it less effective to deter bank runs. We argue that the fragmented regulatory system in the U.S. allows these unintended consequences to arise.

What Drives Sovereign Debt Maturity in European Countries?
González-Fernández, Marcos,González-Velasco, Carmen
The aim of this paper is to study the determinants of sovereign debt maturity for 23 European countries during the period between 1995 and 2013. For this purpose, we use quantile regressions with robust standard errors clustered by countries to consider the impact of the determinants in the entire distribution. The results indicate a positive relation between the level of debt of the country and sovereign debt maturity, particularly for countries with the lowest debt maturity. We also find evidence of a negative relationship between sovereign risk and debt maturity for the lowest and intermediate values of the debt maturity.

When Risks and Uncertainties Collide: Mathematical Finance for Arbitrage Markets in a Quantum Mechanical View
Simone Farinelli,Hideyuki Takada

Geometric Arbitrage Theory reformulates a generic asset model possibly allowing for arbitrage by packaging all assets and their forwards dynamics into a stochastic principal fibre bundle, with a connection whose parallel transport encodes discounting and portfolio rebalancing, and whose curvature measures, in this geometric language, the ''instantaneous arbitrage capability'' generated by the market itself. The asset and market portfolio dynamics have a quantum mechanical description, which is constructed by quantizing the deterministic version of the stochastic Lagrangian system describing a market allowing for arbitrage. Results, obtained by solving explicitly the Schr\"odinger equations by means of spectral decomposition of the Hamilton operator, coincides with those obtained by solving the stochastic Euler Lagrange equations derived by a variational principle and providing therefore consistency. Arbitrage bubbles are computed.

the Impact of TLTROs on Banks’ Lending Policies: The Role of Competition
Garcia-Posada, Miguel
This article assesses the impact of the targeted longer-term refinancing operations (TLTROs) of the European Central Bank (ECB) on the credit supply of the euro area banks. An empirical approach is used that permits distinction between the direct and indirect effects of the TLTROs. The direct effects are that banks participating in the TLTROs increase their credit supply thanks to the lower costs prompted by these refinancing operations. The indirect effects stem from the changes that the TLTROs produce in the competition between banks in the loan and deposit markets and which also affect banks that do not participate directly in the programme, albeit in principle with an ambiguous sign. Taking a sample of 130 banks from 13 countries and their confidential replies to the ECB Bank Lending Survey, it is found that the TLTROs played a direct part in reducing the margins on lower risk loans and easing credit standards in the large enterprises segment. As regards the indirect effects, it is observed that the TLTROs also eased credit standards at non-participating banks, primarily at banks exposed to high competitive pressure, so it appears that the TLTROs increased the supply of bank credit through the indirect channel also.