Monetary Policy and Corporate Debt Structure

34 Pages Posted: 18 Oct 2018

Date Written: October 2018

Abstract

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 high-frequency external instruments. Our results show that conventional and unconventional expansionary monetary policies have similar positive effects on aggregate activity, but their impact on corporate debt structure goes in opposite directions: (i) conventional monetary easing increases loans to non-financial corporations and reduces corporate bond financing; (ii) unconventional monetary easing increases bond finance without affecting the loans.

Keywords: Conventional and unconventional monetary policy, Vector autoregression, External instruments, Corporate debt structure, Bank lending, Bond issuance

JEL Classification: E43; E44; E52

Suggested Citation

Lhuissier, Stéphane and Szczerbowicz, Urszula, Monetary Policy and Corporate Debt Structure (October 2018). Banque de France Working Paper No. 697, Available at SSRN: https://ssrn.com/abstract=3267904 or http://dx.doi.org/10.2139/ssrn.3267904

Stéphane Lhuissier

Banque de France ( email )

Paris
France

Urszula Szczerbowicz (Contact Author)

Banque de France ( email )

Paris
France

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