A note of caution on quantifying banks' recapitalization effects

Kirsten Schmidt, Felix Noth and Lena Tonzer

No 02/2021, Discussion Papers from Deutsche Bundesbank

Abstract: Unconventional monetary policy measures like asset purchase programs aim to reduce certain securities' yield and alter financial institutions' investment behavior. These measures increase the institutions' market value of securities and add to their equity positions. We show that the extent of this recapitalization effect crucially depends on the securities' accounting and valuation methods, country-level regulation, and maturity structure. We argue that future research needs to consider these factors when quantifying banks' recapitalization effects and consequent changes in banks' lending decisions to the real sector.

Keywords: Unconventional monetary policy; security valuation; capital regulation (search for similar items in EconPapers)
JEL-codes: E52 E58 G21 G28 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mac
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https://www.econstor.eu/bitstream/10419/229655/1/1747760552.pdf (application/pdf)

Related works:
Journal Article: A Note of Caution on Quantifying Banks' Recapitalization Effects (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:022021

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