How ECB purchases of corporate bonds helped reduce firms’ borrowing costs

Andrea Zaghini

Research Bulletin, 2020, vol. 66

Abstract: In June 2016, the ECB launched its corporate sector purchase programme, through which it purchased corporate bonds in an effort to improve the financing conditions of euro area firms. In this article, I argue that the programme was successful. In particular, by increasing prices and reducing yields in the targeted bond market segment, the programme encouraged investors to shift their investments towards similar but somewhat riskier bonds. This reduced borrowing costs for many firms, including those whose bonds were not eligible for direct purchase by the ECB. JEL Classification: G15, G32, G38

Keywords: bond yields; market segmentation; Quantitative easing; unconventional monetary policy (search for similar items in EconPapers)
Date: 2020-01
Note: 3828417
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