Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233588 
Year of Publication: 
2020
Version Description: 
This Draft: October 25, 2020
Publisher: 
ZBW – Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
We show that Quantitative Easing (QE) stimulates investment via a corporate-bond lending channel. Fed's large-scale purchases of MBS and treasuries creates a vacuum of safe assets, prompting safer firms to invest by issuing relatively "safe" bonds. Using micro-data around QE, we find that QE increases firm-level investment by 7.4 percentage points for firms with bond market access. Results hold excluding the financial crisis period. This growth is financed with senior bonds. We find no evidence of higher shareholders' payouts. The robust findings support a stylized model in which reducing the supply of treasuries lowers "safe" corporate bond yields, stimulating investment.
Subjects: 
Quantitative Easing
Corporate-Bond Lending Channel
Investment
Safe Assets
Financing
JEL: 
E5
G01
G31
G32
G38
Document Type: 
Working Paper

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