Unconventional Monetary Policy and Corporate Bond Issuance

60 Pages Posted: 28 Feb 2021

See all articles by Roberto A. De Santis

Roberto A. De Santis

European Central Bank (ECB) - Directorate General Economics

Andrea Zaghini

European Central Bank (ECB)

Multiple version iconThere are 2 versions of this paper

Date Written: February 14, 2021

Abstract

We assess the effect and the timing of the corporate arm of the ECB quantitative easing (CSPP) on corporate bond issuance. Because of several contemporaneous measures, to isolate the programme effects we rely on one key eligibility feature: the euro denomination of newly issued bonds. We find that the significant increase in bonds issuance by eligible firms is due to the CSPP and that this effect took at least six months to unfold. This result holds even when comparing firms with similar ratings, thus providing evidence that unconventional monetary policy can foster a financing diversification regardless of firms’ risk profile. We also highlight the impact of the programme on the real economic activity. The evidence suggests that while all firms increased investment in capital expenditures and intangible assets, the CSPP induced eligible firms to invest in marketable and equity securities, to repurchase their own stocks, to hold cash and to carry out short-term investment.

Keywords: Quantitative easing, CSPP, corporate bond market

JEL Classification: E52, G15, G32

Suggested Citation

De Santis, Roberto A. and Zaghini, Andrea, Unconventional Monetary Policy and Corporate Bond Issuance (February 14, 2021). CFS Working Paper, No. 654, 2021, Available at SSRN: https://ssrn.com/abstract=3785627 or http://dx.doi.org/10.2139/ssrn.3785627

Roberto A. De Santis

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Andrea Zaghini (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
10
Abstract Views
64
PlumX Metrics