The impact of conventional and unconventional monetary policy on investor sentiment

Chandler Lutz

Journal of Banking & Finance, 2015, vol. 61, issue C, 89-105

Abstract: This paper examines the relationship between monetary policy and investor sentiment across conventional and unconventional monetary policy regimes. During conventional times, we find that a surprise decrease in the fed funds rate leads to a large increase in investor sentiment. Similarly, when the fed funds rate is at its zero lower bound, research results indicate that expansionary unconventional monetary policy shocks also have a large and positive impact on investor mood. Together, our findings highlight the importance of both conventional and unconventional monetary policy in the determination of investor sentiment.

Keywords: Monetary policy; Unconventional monetary policy; Investor sentiment (search for similar items in EconPapers)
JEL-codes: E52 G02 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (48)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:61:y:2015:i:c:p:89-105

DOI: 10.1016/j.jbankfin.2015.08.019

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