Has the ECB’s Monetary Policy Prompted Companies to Invest or Pay Dividends?

Lior Cohen, Marta Gómez-Puig () and Simon Sosvilla-Rivero

No 201901, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: This paper focuses on how the European Central Bank’s (ECB) monetary policies influenced non-financial firms. The paper’s two main contributions are, first, to shed light on non-financial firms’ decisions on leverage, and how the ECB’s conventional and unconventional policies may have affected them. Second, the paper also examines how these policies influenced non-financial firms’ decisions on capital allocation – primarily capital spending and shareholder distribution (for example, dividends and shares repurchases). Towards this end, we use an exhaustive and unique dataset comprised of income statements and balance sheets of leading non-financial firms that operate in the European Economic and Monetary Union (EMU). The main results suggest that ECB’s monetary policies have encouraged firms to raise their debt burden especially after the global recession of 2008. Finally, the ECB’s policies, mainly after 2011, seem to have also stimulated non-financial firms to allocate more resources towards not only capital spending but also shareholder distribution

Keywords: ECB’s monetary policy; capital structure; leverage; quantitative easing; capital expenditure; dividend’s policy; shareholder yield. JEL classification:E52; E58; G31; G32. (search for similar items in EconPapers)
Pages: 39 pages
Date: 2019-01, Revised 2019-01
New Economics Papers: this item is included in nep-acc, nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Has the ECB’s monetary policy prompted companies to invest, or pay dividends? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:201901

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