Publications

Kapoor, S., Velic, A. QE: Implications for Bank-Risk Taking, Profitability and Systemic Risk. International Journal of Central Banking. (Accepted)

Grimaldi, M. B., & Kapoor, S. (2025). Different strokes for different banks: A heterogeneity analysis of Fed QE on bank lending. Journal of Financial Stability, 101493.

Finnegan, M., Kapoor, S. ECB unconventional monetary policy and SME access to finance. Small Business Economics (2023). https://doi.org/10.1007/s11187-023-00730-0 

Kapoor, S., Peia, O. (2021) The impact of quantitative easing on liquidity creation. Journal of Banking & Finance, 122, 105998. 

Working Papers

Kapoor, S., Mahony, M., & Singh, A. P. (2025). Monetary Policy Tightening and SME Bank-Credit Demand Substitution (No. tep0125). Trinity College Dublin, Department of Economics.

Since July 2022, European Central Bank (ECB) increased its interest rates for the first time in eleven years to bring inflation back to target. This has huge implication on the credit decision for firms, especially the small and medium enterprises (SME), instrumental in supporting employment, innovation and income. Using ECB’s ‘Survey on Access to Finance of Enterprises’ (SAFE) from 2015 to 2023, this paper assesses if the ECB’s monetary policy tightening bears any relationship with SME’s substituting away from bank credit towards alternative sources of finance. Our results show that contractionary monetary policy shocks were positively associated with the likelihood of SME’s substituting away from bank credit. We find this behaviour across SMEs with larger turnover, employee size, age, as well as credit-quality; indicating a much stronger reliance and stickiness to bank credit for relatively smaller, younger, and riskier firms despite increases in the cost of credit following contractionary monetary policy shocks.

Horny, Guillaume and Kapoor, Supriya, Corporate Investment Response to an Easing in Bond Funding Cost (August 15, 2025). Available at SSRN. Revise & Resubmit.

We study the cost of funding channel by investigating how an easing in firms’ external financing cost affects corporate investment. This paper employs ECB’s corporate security purchase program as a quasi-natural experiment that reduces firms’ bond funding costs. Using balance sheet information on non-financial firms in France, we find that firms increase maintenance investment to preserve existing assets, instead of investing in new equipment to grow in scale. Our findings suggest that firms face non-convex costs in adjusting their capital stock and do not smoothly adjust investment following a shock in the cost of capital.

Kapoor, S., (2019). “Balance sheet strength and the bank-lending channel: evidence from an emerging market“, WP2017, G. 

The bank lending channel view of monetary policy argues that bank loan supply should fall during periods of tight monetary policy. Employing a sample of over 122 Indian commercial banks for the period between 2005-17, we investigate the role of cross-sectional heterogeneity in bank balance sheet strength in the effectiveness of bank lending channel. We show that both small and large banks with liquid balance sheets are able to maintain their supply of loans during periods of tight monetary policy. Furthermore, we find that higher capital ratios can also enable banks to maintain their loan supply, in particular among smaller financial institutions. The mechanism at play is a time deposits insulation channel, whereby banks with strong balance sheets can raise time deposits during periods of contractionary monetary policy.

Work in progress

Earnings-based lending versus asset-based lending (with Michael Mahony)

Liquidity Mismatch Index (with Urszula Szczerbowicz)

Derivative Pricing and Hedging Basketball Betting Markets: A Risk-Management Framework (with Sai Akshanth Gunda)