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Whatever it takes. What's the impact of a major nonconventional monetary policy intervention?

Author

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  • Carlo Alcaraz
  • Stijn Claessens
  • Gabriel Cuadra
  • David Marques-Ibanez
  • Horacio Sapriza

Abstract

We assess how a major, unconventional central bank intervention, Draghi's "whatever it takes" speech, affected lending conditions. Similar to other large interventions, it responded to adverse financial and macroeconomic developments that also influenced the supply and demand for credit. We avoid such endogeneity concerns by comparing credit granted and its conditions by individual banks to the same borrower in a third country. We show that the intervention reversed prior risk-taking - in volume, price, and risk ratings - by subsidiaries of euro area banks relative to other local and foreign banks. Our results document a new effect of interventions and are robust along many dimensions.

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  • Carlo Alcaraz & Stijn Claessens & Gabriel Cuadra & David Marques-Ibanez & Horacio Sapriza, 2018. "Whatever it takes. What's the impact of a major nonconventional monetary policy intervention?," BIS Working Papers 749, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:749
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    6. Bank for International Settlements, 2019. "Unconventional monetary policy tools: a cross-country analysis," CGFS Papers, Bank for International Settlements, number 63.
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    More about this item

    Keywords

    unconventional monetary policy; credit conditions; spillovers;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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