skip to content

Faculty of Economics

Journal Cover

Rodnyansky, A. and Darmouni, O.

The Effects of Quantitative Easing on Bank Lending Behavior

Review of Financial Studies, forthcoming

(2017)

Abstract: Banks' exposure to large-scale asset purchases, as measured by the relative prevalence of mortgage-backed securities on their books, affects lending following unconventional monetary policy shocks. Using a difference-in-differences identification strategy, this paper finds strong effects of the first and third round of quantitative easing (QE1 and QE3) on credit. Highly affected commercial banks increase lending by 2% to 3% relative to their counterparts. QE2 had no significant impact, consistent with its exclusive focus on Treasuries sparsely held by banks. Overall, banks respond heterogeneously, and the type of asset being targeted is central to QE.

Keywords: Unconventional monetary policy, quantitative easing, bank lending, mortgage-backed securities

JEL Codes: E44, E52, G21

Author links: Alexander Rodnyansky  

Publisher's Link: http://dx.doi.org/10.2139/ssrn.2669009

Open Access Full Text: https://www.repository.cam.ac.uk/handle/1810/279272



Papers and Publications



Recent Publications


Fruehwirth, J., Iyer, S. and Zhang, A. Religion and Depression in Adolescence Journal of Political Economy [2019]

Faraglia, E., Marcet, A., Oikonomou, R. and Scott, A. Government Debt management: the Short and the Long of it Review of Economic Studies [2019]

Elliott, M., Georg, C-P. and Hazell, J. Systemic Risk Shifting in Financial Networks Journal of Economic Theory [2021]

Aidt, T. S., Asatryan, Z., Badalyan, L. and Heinemann, F. Vote Buying or (Political) Business (Cycles) as Usual? Review of Economics and Statistics [2020]