Quantitative easing, investment, and safe assets: the corporate-bond lending channel
Rafael Matta (),
Jose-Luis Peydro () and
Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
We show that Quantitative Easing (QE) stimulates investment via a corporate-bond lending channel. Fedâ€™s large-scale asset purchases of MBS and treasuries through QE creates a vacuum of safe assets, prompting safer firms to invest more by issuing relatively "safe" bonds. Using micro-data around QE, we find that QE increases firm-level investment by 7.4 percentage points for firms with bond market access. This growth is financed with senior bonds. We find no evidence of higher shareholdersâ€™ payouts associated to QE. The robust findings are consistent with a model in which reducing the supply of government debt lowers "safe" corporate bond yields, stimulating investment.
Keywords: Quantitative Easing (QE); Corporate-Bond Lending Channel; Investment; Safe Assets; Financing (search for similar items in EconPapers)
JEL-codes: E5 G01 G31 G32 G38 (search for similar items in EconPapers)
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Working Paper: Quantitative Easing, Investment, and Safe Assets: The Corporate-Bond Lending Channel (2020)
Working Paper: Quantitative Easing, investment, and safe assets: The corporate-bond lending channel (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1722
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