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Whatever it takes: what’s the impact of a major nonconventional monetary policy intervention?

Carlo Alcaraz Pribaz (), Stijn Claessens (), Gabriel Cuadra (), David Marques-Ibanez () and Horacio Sapriza

No 2249, Working Paper Series from European Central Bank

Abstract: We assess how a major, unconventional central bank intervention, Draghi’s “whatever it takes” speech, affected lending conditions. Similar to other large interventions, it responded to adverse financial and macroeconomic developments that also influenced the supply and demand for credit. We avoid such endogeneity concerns by focusing on a third country and comparing lending conditions by euro area and other banks to the same borrower. We show that the intervention reversed prior risk-taking – in volume, price, and loan credit ratings – by subsidiaries of euro area banks relative to local and other foreign banks. Our results document a new effect of large central banks’ interventions and are robust along many dimensions. JEL Classification: E51, G21, F34

Keywords: credit conditions; spillovers; unconventional monetary policy (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-ban, nep-eec, nep-ifn and nep-mon
Note: 328790
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