Beneath the surface: The asymmetric effects of unconventional monetary policy on corporate investment

Luis P. de la Horra, Javier Perote and Gabriel de la Fuente

Finance Research Letters, 2024, vol. 61, issue C

Abstract: This paper explores the asymmetric effects of unconventional monetary policy on corporate investment in the aftermath of the Great Recession. Using a comprehensive dataset of US listed firms, our research unveils a compelling insight: firms with higher investment irreversibility and market power are less responsive to fluctuations in corporate bond yields following an unconventional monetary policy announcement. These results emphasize the critical importance of taking into consideration firm-specific characteristics when formulating monetary policy, providing valuable insights for central banks aiming to enhance the effectiveness of their policies.

Keywords: Panel VAR; Corporate investment; Monetary policy; Investment irreversibility; Bond yields (search for similar items in EconPapers)
JEL-codes: C23 E52 E58 G31 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000801

DOI: 10.1016/j.frl.2024.105050

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