Monetary stimulus and bank lending

Indraneel Chakraborty, Itay Goldstein and Andrew MacKinlay

Journal of Financial Economics, 2020, vol. 136, issue 1, 189-218

Abstract: The US Federal Reserve purchased both agency mortgage-backed securities (MBS) and Treasury securities to conduct quantitative easing. Using micro-level data, we find that banks benefiting from MBS purchases increase mortgage origination, compared with other banks. At the same time, these banks reduce commercial lending and firms that borrow from these banks decrease investment. The effect of Treasury purchases is different: either positive or insignificant in most cases. Our results suggest that MBS purchases caused unintended real effects and that Treasury purchases did not cause a large positive stimulus to the economy through the bank lending channel.

Keywords: Bank lending; Quantitative easing; Mortgage-backed securities (search for similar items in EconPapers)
JEL-codes: E52 E58 G21 G31 G32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (104)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X19302260
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:136:y:2020:i:1:p:189-218

DOI: 10.1016/j.jfineco.2019.09.007

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().