TY  - UNPD
A1  - Berg, Tobias
A1  - Haselmann, Rainer
A1  - Kick, Thomas
A1  - Schreiber, Sebastian
T1  - Unintended consequences of QE: real estate prices and financial stability
N2  - We investigate how unconventional monetary policy, via central banks’ purchases of corporate bonds, unfolds in credit-saturated markets. While this policy results in a loosening of credit market conditions as intended by policymakers, we report two unintended side effects. First, the policy impacts the allocation of credit among industries. Affected banks reallocate loans from investment-grade firms active on bond markets almost entirely to real estate asset managers. Other industries do not obtain more loans, particularly real estate developers and construction firms. We document an increase in real estate prices due to this policy, which fuels real estate overvaluation. Second, more loan write-offs arise from lending to these firms, and banks are not compensated for this risk by higher interest rates. We document a drop in bank profitability and, at the same time, a higher reliance on real estate collateral. Our findings suggest that central banks’ quantitative easing has substantial adverse effects in credit-saturated economies.
T3  - Working paper series / Institute for Monetary and Financial Stability - 196 
Y1  - 2023
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/71226
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-712268
UR  - https://www.imfs-frankfurt.de/forschung/imfs-working-papers/details.html?tx_mmpublications_publicationsdetail%5Bcontroller%5D=Publication&tx_mmpublications_publicationsdetail%5Bpublication%5D=463&cHash=f623f9095cba8327b0cab25aea88bed7
N1  - This research was funded by the German Research Foundation (Deutsche
Forschungsgemeinschaft, DFG) project FOR 2774 and conducted under Bundesbank research project number 2019/0013.
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -