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What impact does the ECB’s quantitative easing policy have on bank profitability?

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  • Maria Demertzis
  • Guntram B. Wolff

Abstract

This policy contribution was prepared for the Committee on Economic and Monetary Affairs of the European Parliament (ECON) as an input for the Monetary Dialogue of 28 November 2016 between ECON and the European Central Bank. Copyright remains with the European Parliament at all times. Quantitative easing (QE) affects banks’ profitability in three main ways. First, as QE drives up bond prices, banks holding such bonds see their balance sheets...

Suggested Citation

  • Maria Demertzis & Guntram B. Wolff, 2016. "What impact does the ECB’s quantitative easing policy have on bank profitability?," Policy Contributions 17913, Bruegel.
    • Handle: RePEc:bre:polcon:17913
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    References listed on IDEAS

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    1. Pietro Cova & Patrizio Pagano & Massimiliano Pisani, 2015. "Domestic and international macroeconomic effects of the Eurosystem expanded asset purchase programme," Temi di discussione (Economic working papers) 1036, Bank of Italy, Economic Research and International Relations Area.
    2. Agur, Itai & Demertzis, Maria, 2019. "Will macroprudential policy counteract monetary policy’s effects on financial stability?," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 65-75.
    3. Grégory Claeys, 2016. "Low long-term rates- bond bubble or symptom of secular stagnation?," Policy Contributions 16625, Bruegel.
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    1. Bulfone, Fabio & Ergen, Timur & Kalaitzake, Manolis, 2022. "No strings attached: Corporate welfare, state intervention, and the issue of conditionality," MPIfG Discussion Paper 22/2, Max Planck Institute for the Study of Societies.
    2. Kabundi, Alain & De Simone, Francisco Nadal, 2022. "Euro area banking and monetary policy shocks in the QE era," Journal of Financial Stability, Elsevier, vol. 63(C).
    3. Urbschat, Florian, 2018. "The Good, the Bad, and the Ugly: Impact of Negative Interest Rates and QE on the Profitability and Risk-Taking of 1600 German Banks," Discussion Papers in Economics 56535, University of Munich, Department of Economics.
    4. Salvatore Perdichizzi & Matteo Cotugno & Giuseppe Torluccio, 2022. "Is the ECB’s conventional monetary policy state‐dependent? An event study approach," Manchester School, University of Manchester, vol. 90(2), pages 213-236, March.
    5. Botta, Alberto & Tippet, Ben & Onaran, Özlem, 2018. "Divergence between the core and the periphery and secular stagnation in the Eurozone," Greenwich Papers in Political Economy 20405, University of Greenwich, Greenwich Political Economy Research Centre.

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