What is the Impact of a Major Unconventional Monetary Policy Intervention?
Abstract How does the credible announcement of an unconventional monetary policy intervention affect bank lending standards during crises? We use a major central bank announcement, the “whatever it takes” speech of the European Central Bank President that boosted the capital of banks, as a natural experiment. We compare changes in lending standards of subsidiaries of euro area versus other banks in a third country, Mexico. The speech reversed a prior trend of euro area banks augmenting their risk-taking via loan growth, lending rates, and credit risk. Our findings show that policies that amount to capitalization can reduce risk-taking in times of stress, adding a new dimension to the bank capital channel. (JEL: E51; G21; F34)
Authors
- Gabriel Cuadra
- Horacio Sapriza
- David Marques-Ibanez
- Stijn Claessens
- Carlos Alcaraz
Institutions
- European Central Bank (DE)
- Instituto Tecnológico Autónomo de México (MX)
- Bank of Mexico (MX)
- Yale University (US)
- Federal Reserve Bank of Richmond (US)
Publication Details
- Journal
- Journal of the European Economic Association
- Published
- 2026-03-21
- DOI
- https://doi.org/10.1093/jeea/jvag015
- Primary Topic
- Banking stability, regulation, efficiency
- Type
- article
- Field-Weighted Citation Impact
- 0.00