The Effects of the BoJ’s ETF Purchases on Equities and Corporate Investment

49 Pages Posted: 30 Nov 2023

Date Written: September 22, 2023


The Bank of Japan acquired ETFs and stocks to stimulate Japan’s stagnating economy and improve financial conditions. Studies found that this program raised equity prices, although its effectiveness in stimulating corporate investment remained unclear. This paper contributes to the literature by identifying the program's channels affecting equities and corporate investment by utilizing data from firms listed on the Nikkei-225 from 2012 to 2019 and estimating a panel GMM. The results show the program raised stock returns and reduced volatility by creating price pressures and inducing investors to rebalance their portfolios; however, it diminished market liquidity by reducing the supply of shares and adjusting market expectations. The program raised investment for firms with high-growth prospects or domestic-oriented revenue by increasing household wealth and reducing equity risk premia to create favorable financial conditions. Overall, this study illustrates the program stimulated investment while having trade-offs regarding market liquidity and cash hoarding.

Keywords: Bank of Japan, quantitative easing, purchasing equities, corporate investment

JEL Classification: E52, E58, E44

Suggested Citation

Cohen, Lior, The Effects of the BoJ’s ETF Purchases on Equities and Corporate Investment (September 22, 2023). Volume 129, December 2023, 106540, Available at SSRN: or

Lior Cohen (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007

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