VOT Research Desk
The Reserve Bank of Australia (RBA) stated in a research report released on Tuesday that its Term Funding Facility (TFF) failed to increase commercial borrowing.
As part of its Covid policy response, the central bank established a low-cost lending facility. It met a crucial goal of providing banks with three years of low-cost funding and was available for drawdown until June 30, 2021.
We find no statistically significant evidence that the TFF increased corporate loan supply. However, our confidence intervals are broad, and distinguishing the effects of the TFF from the effects of pandemic-related disruptions and other policy interventions on credit supply and demand presents major identification issues.
Nonetheless, the TFF provided a reliable source of capital during a period of significant stress in the industry. Any effects on business lending through these channels may not be fully reflected in our results.”
