The Effects of Unconventional Monetary Policies on Bank Soundness
Electronic Access:
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Summary:
Unconventional monetary policy is often assumed to benefit banks. However, we find little supporting evidence. Rather, we find some evidence for heightened medium-term risks. First, in an event study using a novel instrument for monetary policy surprises, we do not detect clear effects of monetary easing on bank stock valuation but find a deterioration of medium-term bank credit risk in the United States, the euro area, and the United Kingdom. Second, in panel regressions using U.S. banks’ balance sheet information, we show that bank profitability and risk taking are ambiguously affected, while balance sheet repair is delayed.
Series:
Working Paper No. 2014/152
Subject:
Banking Bond yields Central bank policy rate Financial institutions Financial services Monetary policy Stocks Unconventional monetary policies Yield curve
English
Publication Date:
August 13, 2014
ISBN/ISSN:
9781498363563/1018-5941
Stock No:
WPIEA2014152
Pages:
40
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