Charles O'Donnell*, Regis Sawadogo**

Séminaires internes
phd seminar

Charles O'Donnell*, Regis Sawadogo**

AMSE
The interest of being eligible*
Human and political capital in a resource-abundant economy: The role of inequality**
Co-écrit avec
Cecilia Garcia-Penalosa**
Lieu

IBD Amphi

Îlot Bernard du Bois - Amphithéâtre

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Mardi 20 juin 2017| 12:30 - 14:00
Contact(s)

Edward Levavasseur : edward.levavasseur[at]univ-amu.fr
Lara Vivian : lara.vivian[at]univ-amu.fr

Résumé

*Major central banks often accept pooled individual corporate loans as collateral in their refinancing operations with credit institutions. Such "eligible" loans to firms therefore provide a liquidity advantage to the banks that originate them. Banks may in turn pass on this advantage to the borrowers in the form of a reduced liquidity risk premium: the eligibility discount. We exploit a temporary surprise extension of the ECB's universe of eligible collateral to medium-quality corporate loans, the Additional Credit Claim (ACC) program of February 2012, to assess the eligibility discount to corporate loans spreads in France. We find that becoming eligible to the ECB's collateral framework translates into a reduction in rates by 8bp for new loans issued to ACC-firms, controlling for loan-, firm- and bank-level characteristics. In line with the opportunity-cost view of collateral choice, we also find evidence that this collateral channel of monetary policy is only active for banks that ex ante pledged more credit claims as collateral with the ECB and held a larger share of ACC-eligible loans in their portfolios.

**In many low-income countries access to both education and political activity are de facto restricted to an elite minority. In this paper we consider how such an elite chooses between investing in human and political capital in an economy with abundant natural resources. The trade-off between these two types of investments, and hence long-run growth, crucially depends on a country’s endowment of natural resources as they affect the relative returns to investing in human and in political capital. In this context, inequality becomes a key element. On the one hand, inequality in access to human and political capita affects whether the economy is or not in a high-growth equilibrium; on the other, low-growth equilibria and poverty traps are characterised not only by lower average incomes but also by greater inequality than a high growth equilibrium.