IMF Working Papers

The Effects of Unconventional Monetary Policies on Bank Soundness

By Frederic Lambert, Kenichi Ueda

August 13, 2014

Download PDF

Preview Citation

Format: Chicago

Frederic Lambert, and Kenichi Ueda. The Effects of Unconventional Monetary Policies on Bank Soundness, (USA: International Monetary Fund, 2014) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Subject: Banking, Bond yields, Central bank policy rate, Financial institutions, Financial services, Monetary policy, Stocks, Unconventional monetary policies, Yield curve

Keywords: B. bank risk-taking, Balance Sheet Repair, Bank CDS spread, Bank Profitability, Bank Risk, Bank size, Bond yields, CDS spread, Central bank policy rate, Equity ratio, Fed funds rate, Futures contract, Global, Monetary Policy, Monetary policy announcement, Panel regression, Return on assets, Short-term debt, Stocks, Taylor gap, Unconventional monetary policies, WP, Yield curve

Publication Details

  • Pages:

    40

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2014/152

  • Stock No:

    WPIEA2014152

  • ISBN:

    9781498363563

  • ISSN:

    1018-5941

You May Also Be Interested In...

Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

November 15, 2024

Foreign Exchange Intervention Under the Integrated Policy Framework: The Case of India

November 15, 2024

Central Bank Digital Currency: Progress And Further Considerations

November 8, 2024

Colombia: Technical Assistance Report-Report on the Mineral Asset Accounts and Carbon Footprints Mission (May 20–24, 2024)

November 8, 2024