Unconventional Monetary Policy Transmission and Bank Lending Relationships.

This article investigates how the European Central Bank’s (ECB) unconventional monetary policy, specifically the very long-term refinancing operations (VLTROs) of 2011–2012, was transmitted differently to firms with single-bank versus multibank relationships in France. Using firm-level credit rating thresholds that determined eligibility for collateralized ECB funding, the study finds that policy-driven lending was selectively transmitted to single-bank firms, favoring those with stronger banking relationships and better observable financial characteristics, while multibank firms received more uniform lending increases, including spillover effects to some ineligible borrowers. The research highlights that single-bank firms, which constitute a majority of firms in many economies and rely heavily on bank finance, experienced attenuated policy pass-through, with banks applying higher lending standards and extending longer maturity loans primarily to these firms. In contrast, multibank firms benefited from competition among lenders, resulting in broader access to policy liquidity, typically through shorter-term lending. These findings underscore the importance of considering bank-firm relationship structures in assessing the distributional effects and overall effectiveness of unconventional monetary policies.