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Beneath the surface: The asymmetric effects of unconventional monetary policy on corporate investment

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  • de la Horra, Luis P.
  • Perote, Javier
  • de la Fuente, Gabriel

Abstract

This paper explores the asymmetric effects of unconventional monetary policy on corporate investment in the aftermath of the Great Recession. Using a comprehensive dataset of US listed firms, our research unveils a compelling insight: firms with higher investment irreversibility and market power are less responsive to fluctuations in corporate bond yields following an unconventional monetary policy announcement. These results emphasize the critical importance of taking into consideration firm-specific characteristics when formulating monetary policy, providing valuable insights for central banks aiming to enhance the effectiveness of their policies.

Suggested Citation

  • de la Horra, Luis P. & Perote, Javier & de la Fuente, Gabriel, 2024. "Beneath the surface: The asymmetric effects of unconventional monetary policy on corporate investment," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000801
    DOI: 10.1016/j.frl.2024.105050
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    More about this item

    Keywords

    Panel VAR; Corporate investment; Monetary policy; Investment irreversibility; Bond yields;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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