Whatever It Takes: What’s the Impact of a Major Nonconventional Monetary Policy Intervention?

50 Pages Posted: 20 Mar 2019

See all articles by Carlos Alcaraz

Carlos Alcaraz

Independent

Stijn Claessens

Bank for International Settlements (BIS)

Gabriel Cuadra

Banco de México

David Marques-Ibanez

European Central Bank (ECB)

Horacio Sapriza

Board of Governors of the Federal Reserve System

Date Written: March 18, 2019

Abstract

We assess how a major, unconventional central bank intervention, Draghi’s “whatever it takes” speech, affected lending conditions. Similar to other large interventions, it responded to adverse financial and macroeconomic developments that also influenced the supply and demand for credit. We avoid such endogeneity concerns by focusing on a third country and comparing lending conditions by euro area and other banks to the same borrower. We show that the intervention reversed prior risk-taking––in volume, price, and loan credit ratings––by subsidiaries of euro area banks relative to local and other foreign banks. Our results document a new effect of large central banks’ interventions and are robust along many dimensions.

Keywords: unconventional monetary policy, credit conditions, spillovers

JEL Classification: E51, G21, F34

Suggested Citation

Alcaraz, Carlos and Claessens, Stijn and Cuadra, Gabriel and Marques-Ibanez, David and Sapriza, Horacio, Whatever It Takes: What’s the Impact of a Major Nonconventional Monetary Policy Intervention? (March 18, 2019). ECB Working Paper No. 2249 (2019); ISBN 978-92-899-3511-1 , Available at SSRN: https://ssrn.com/abstract=3355254

Stijn Claessens

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Gabriel Cuadra

Banco de México

Av. 5 de Mayo No. 6
Col. Centro, Deleg. Cuauhtémoc
Ciudad de México, DF, 06059
Mexico

David Marques-Ibanez

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
49 6913 44 6460 (Phone)
49 6913 44 6460 (Fax)

Horacio Sapriza

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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