TY  - UNPD
A1  - Berg, Tobias
A1  - Kick, Thomas
A1  - Schreiber, Sebastian
A1  - Haselmann, Rainer
T1  - Unintended side effects of unconventional monetary policy
T2  - LawFin working paper ; No. 27
N2  - Using granular supervisory data from Germany, we investigate the impact of unconventional monetary policies via central banks’ purchase of corporate bonds. While this policy results in a loosening of credit market conditions as intended by policy makers, we document two unintended side effects. First, banks that are more exposed to borrowers benefiting from the bond purchases now lend more to high-risk firms with no access to bond markets. Since more loan write-offs arise from these firms and banks are not compensated for this risk by higher interest rates, we document a drop in bank profitability. Second, the policy impacts the allocation of loans among industries. Affected banks reallocate loans from investment grade firms active on bond markets to mainly real estate firms without investment grade rating. Overall, our findings suggest that central banks’ quantitative easing via the corporate bond markets has the potential to contribute to both banking sector instability and real estate bubbles.
T3  - LawFin Working Paper - 27 
Y1  - 2021
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/61666
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-616663
UR  - https://ssrn.com/abstract=4006275
N1  - This research was funded by the German Research Foundation (Deutsche Forschungsgemeinschaft, DFG) – project FOR 2774.
IS  - December 2021
PB  - Center for Advanced Studies on the Foundations of Law and Finance, House of Finance, Goethe University
CY  - Frankfurt am Main
ER  -