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Quantitative Easing, Investment, and Safe Assets: The Corporate Bond–Lending Channel

Author

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  • ERASMO GIAMBONA
  • RAFAEL MATTA
  • JOSE‐LUIS PEYDRO
  • YE WANG

Abstract

We show that Quantitative Easing (QE) stimulates investment via a corporate bond–lending channel. Fed's large‐scale purchases of mortgage‐backed securities (MBS) and treasuries create a vacuum of safe assets, prompting safer firms to invest by issuing relatively “safe” bonds. Using microdata around different QE rounds, our robust results suggest that QE increases the investment of firms with bond market access. The effect is larger for safer firms. This growth is financed with senior bonds, without higher shareholders' payouts. Results hold excluding the financial crisis period. The findings support a stylized model where lower supply of treasuries reduces “safe” corporate bond yields, stimulating investment.

Suggested Citation

  • Erasmo Giambona & Rafael Matta & Jose‐Luis Peydro & Ye Wang, 2026. "Quantitative Easing, Investment, and Safe Assets: The Corporate Bond–Lending Channel," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 58(2), pages 329-364, March.
    • Handle: RePEc:wly:jmoncb:v:58:y:2026:i:2:p:329-364
    DOI: 10.1111/jmcb.13272
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    1. is not listed on IDEAS
    2. Maurizio Solari & Alexandre Le Bloc’h & Sergio Rossi, 2024. "Ecological transition in a monetary economy of production: a heterodox approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 13-37, March.
    3. Giovanardi, Francesco & Kaldorf, Matthias & Radke, Lucas & Wicknig, Florian, 2022. "The preferential treatment of green bonds," Discussion Papers 51/2022, Deutsche Bundesbank.
    4. Yannis Dafermos, 2022. "Climate change, central banking and financial supervision: beyond the risk exposure approach," Chapters, in: Sylvio Kappes & Louis-Philippe Rochon & Guillaume Vallet (ed.), The Future of Central Banking, chapter 8, pages 175-194, Edward Elgar Publishing.
    5. Koráb, Petr & Saadaoui Mallek, Ray & Dibooglu, Sel, 2021. "Effects of quantitative easing on firm performance in the euro area," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    6. Andrea Nocera & M. Hashem Pesaran, 2022. "Causal Effects of the Fed's Large-Scale Asset Purchases on Firms' Capital Structure," CESifo Working Paper Series 9695, CESifo.
    7. Darmouni, Olivier & Siani, Kerry Y., 2025. "Bond market stimulus: Firm-level evidence," Journal of Monetary Economics, Elsevier, vol. 151(C).
    8. Tischer, Johannes, 2022. "Quantitative Easing, Safe Asset Scarcity and Bank Lending," VfS Annual Conference 2022 (Basel): Big Data in Economics 264035, Verein für Socialpolitik / German Economic Association.
    9. Tischer, Johannes, 2021. "Quantitative easing, safe asset scarcity and bank lending," Discussion Papers 35/2021, Deutsche Bundesbank.
    10. Dawood Ashraf & Mohsin Khawaja & M. Ishaq Bhatti, 2022. "Raising capital amid economic policy uncertainty: an empirical investigation," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-32, December.
    11. Francesco Giovanardi & Matthias Kaldorf & Lucas Radke & Florian Wicknig, 2023. "The Preferential Treatment of Green Bonds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 657-676, December.
    12. Cohen, Lior, 2023. "The effects of the BoJ's ETF purchases on equities and corporate investment," Economic Modelling, Elsevier, vol. 129(C).

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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