A capital structure channel of monetary policy
We study the transmission channels from central banks’ quantitative easing programs via the banking sector when central banks start purchasing corporate bonds. We find evidence consistent with a “capital structure channel” of monetary policy. The announcement of central bank purchases reduces the bo...
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| Veröffentlicht in: | Journal of financial economics 2019-08, Vol.133 (2), p.357-378 |
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| container_end_page | 378 |
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| container_issue | 2 |
| container_start_page | 357 |
| container_title | Journal of financial economics |
| container_volume | 133 |
| creator | Grosse-Rueschkamp, Benjamin Steffen, Sascha Streitz, Daniel |
| description | We study the transmission channels from central banks’ quantitative easing programs via the banking sector when central banks start purchasing corporate bonds. We find evidence consistent with a “capital structure channel” of monetary policy. The announcement of central bank purchases reduces the bond yields of firms whose bonds are eligible for central bank purchases. These firms substitute bank term loans with bond debt, thereby relaxing banks’ lending constraints: banks with low tier-1 ratios and high nonperforming loans increase lending to private (and profitable) firms, which experience a growth in investment. The credit reallocation increases banks’ risk-taking in corporate credit. |
| doi_str_mv | 10.1016/j.jfineco.2019.03.006 |
| format | Article |
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| ispartof | Journal of financial economics, 2019-08, Vol.133 (2), p.357-378 |
| issn | 0304-405X 1879-2774 |
| language | eng |
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| source | Elsevier ScienceDirect Journals |
| subjects | Bank loans Bond debt Bonds Capital structure Central banks Companies Corporate bonds Debt capital structure Lending Loans Monetary policy Quantitative easing Real effects Risk taking Unconventional monetary policy |
| title | A capital structure channel of monetary policy |
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