Bond Market Stimulus: Firm-Level Evidence
65 Pages Posted: 8 Oct 2020 Last revised: 3 Nov 2022
Date Written: January 31, 2022
Using micro-data on corporate balance sheets, we study firm behavior after the unprecedented policy support to corporate bond markets in 2020. As bond yields fell, firms issued bonds to accumulate large and persistent amounts of liquid assets. The effects on real investment was generally weak: many issuers already had access to bank liquidity and maintained equity payouts, while others used bond funds to pay back bank debt. This evidence sheds light on how corporate liquidity and financial heterogeneity matter for the macro-economy and the transmission of unconventional policy.
Keywords: Corporate bonds, unconventional monetary policy, corporate liquidity
JEL Classification: G23, E44, G32, E52
Suggested Citation: Suggested Citation