Heterogeneity in Corporate Debt Structures and the Transmission of Monetary Policy

This paper evaluates and compares the effects of conventional and unconventional monetary policies on the corporate debt structure in the United States. It does so by using a vector autoregression in which policy shocks are identified through highfrequency external instruments. Our results show that both monetary policies shift the firms' composition of external financing, though in a different way. An expansionary conventional (unconventional) monetary policy leads to a rise (decline) in loans and a decline (rise) in debt securities issuance. Our results suggest that unconventional monetary policy operated primarily through a portfolio rebalancing channel, rather than through a bank lending channel.

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Heterogeneity in Corporate Debt Structures and the Transmission of Monetary Policy

Abstract: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.

Cited by 2 publications

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Examining QE’s bang for the Buck: Does Quantitative easing reduce credit and liquidity risks and stimulate real economic activity?

Examining QE’s bang for the Buck: Does Quantitative easing reduce credit and liquidity risks and stimulate real economic activity?

Monetary Policy and Corporate Debt Structure*

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