The RBA says its policy of cheap pandemic loans for businesses has (sort of) failed


The Reserve Bank of Australia has released a research paper on its Cheap Lending Facility introduced as part of its policy response to Covid. He concludes that the facility has failed to stimulate corporate borrowing.

  • Reserve Bank of Australia Term Funding Facility (TFF)
  • It achieved a key goal of providing banks with low-cost funding over three years and was available for drawdown until June 30, 2021.
  • we find no statistically significant evidence that TFF increased the supply of business credit

The report then covers:

  • However, our confidence intervals are wide and there are significant identification challenges in distinguishing the effects of TFF from the effects of pandemic-related disruptions and other policy interventions on credit supply and demand. Nonetheless, TFF provided an assured source of funding at a time of considerable stress in the financial system and reduced funding costs for banks, and any effect on corporate lending through these channels may not be fully reflected in our results.

The link is here for the full.

Cheap bank financing, however, has helped push property prices (even further) into the sky…



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