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The effectiveness of quantitative easing: Evidence from Japan

Author

Listed:
  • Matousek, Roman
  • Papadamou, Stephanos Τ.
  • Šević, Aleksandar
  • Tzeremes, Nickolaos G.

Abstract

This study contributes to current research on quantitative easing. We provide a novel analysis of the quantitative easing effectiveness as an unconventional monetary policy tool in Japan over the last two decades. The paper advances current research on quantitative easing by exploring quantitative easing through the prism of the monetary transmission mechanism. We examine the response of Japanese Regional Banks to the quantitative easing operations conducted by the Bank of Japan from the early 2000s till 2015. The analysis is performed within the framework of the bank lending channel under the unconventional monetary policy strategies. We find that small-sized regional banks underline the significant positive effect of quantitative easing on gross domestic product and inflation that works through the securities holdings and leverage preferences. Monetary authorities should pay particular attention to policies for such banks and banks with a high level of non-performing loans. Deposit growth after a quantitative easing shock is only present in large-sized banks with low NPLs holdings.

Suggested Citation

  • Matousek, Roman & Papadamou, Stephanos Τ. & Šević, Aleksandar & Tzeremes, Nickolaos G., 2019. "The effectiveness of quantitative easing: Evidence from Japan," Journal of International Money and Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:jimfin:v:99:y:2019:i:c:s0261560618306806
    DOI: 10.1016/j.jimonfin.2019.102068
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    Citations

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    Cited by:

    1. Anastasios Evgenidis & Stephanos Papadamou, 2021. "The impact of unconventional monetary policy in the euro area. Structural and scenario analysis from a Bayesian VAR," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5684-5703, October.
    2. Stefański, Maciej, 2022. "Macroeconomic effects and transmission channels of quantitative easing," Economic Modelling, Elsevier, vol. 114(C).
    3. Kirikos, Dimitris G., 2020. "Quantitative easing impotence in the liquidity trap: Further evidence," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 151-162.
    4. Kuan-Chieh Chen, 2022. "The Spillover Effects of US Unconventional Monetary Policy on the Taiwanese Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 12(2), pages 104-109, March.
    5. Ni Zhan, 2021. "Where does the Stimulus go? Deep Generative Model for Commercial Banking Deposits," Papers 2101.09230, arXiv.org.
    6. Dimitris Kenourgios & Despoina Ntaikou, 2021. "ECB’s unconventional monetary policy and bank lending supply and performance in the euro area," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(2), pages 211-224, April.
    7. Maciej Ryczkowski, 2021. "Money and inflation in inflation-targeting regimes – new evidence from time–frequency analysis," Journal of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 17-44, January.
    8. Kenourgios, Dimitris & Papadamou, Stephanos & Dimitriou, Dimitrios & Zopounidis, Constantin, 2020. "Modelling the dynamics of unconventional monetary policies’ impact on professionals’ forecasts," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 64(C).
    9. Hsu, Feng-Jui & Chen, Sheng-Hung, 2021. "US quantitative easing and firm’s default risk: The role of Corporate Social Responsibility (CSR)," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 650-664.
    10. Kourtzidis, Stavros & Matousek, Roman & Tzeremes, Nickolaos G., 2021. "Modelling a multi-period production process: Evidence from the Japanese regional banks," European Journal of Operational Research, Elsevier, vol. 294(1), pages 327-339.
    11. Thi Bich Ngoc Tran & Hoang Cam Huong Pham, 2020. "The Spillover Effects of the US Unconventional Monetary Policy: New Evidence from Asian Developing Countries," JRFM, MDPI, vol. 13(8), pages 1-26, July.
    12. Stephanos Papadamou & Νikolaos A. Kyriazis & Panayiotis G. Tzeremes, 2020. "US non-linear causal effects on global equity indices in Normal times versus unconventional eras," International Economics and Economic Policy, Springer, vol. 17(2), pages 381-407, May.
    13. Luigi Oddo & Mile Bosnjak, 2021. "A comparative analysis of the monetary policy transmission channels in the U.S: a wavelet-based approach," Applied Economics, Taylor & Francis Journals, vol. 53(38), pages 4448-4463, August.

    More about this item

    Keywords

    Quantitative easing; Financial institutions; NPLs; Panel VAR; Japan;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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