Government policies during COVID-19 pandemic boost lending, prevent recession amplification.
The paper examines how policies put in place during the COVID-19 pandemic in the euro area helped support lending to businesses. By analyzing measures from banking supervision, macroprudential authorities, and governments, the study found that these policies increased lending to non-financial companies by 12% compared to no action, preventing a deeper recession. The combined efforts of national, supervisory, and macroprudential actions worked together to positively impact the banking sector and support the economy.