Indraneel Chakraborty, University of Miami: Monetary Stimulus and Bank Lending

Department seminar. Indraneel Chakraborty is Assistant Professor of Finance at the University of Miami. He will present a paper entitled "Monetary Stimulus and Bank Lending", co-authored by Itay Goldstein and Andrew MacKinlay.

Photo of Indraneel Chakraborty

Indraneel Chakraborty. Photo: University of Miami.

Abstract:

The U.S. Federal Reserve purchased both agency mortgage-backed securities (MBS) and Treasury securities to conduct Quantitative Easing (QE). Using micro-level data, we find that banks benefiting from MBS purchases increase mortgage origination, compared to other banks. At the same time, these banks reduce commercial lending and firms that borrow from these banks decrease investment. The effect of Treasury purchases is different: either positive or insignificant in most cases. Our results suggest that MBS purchases caused unintended real effects and that Treasury purchases did not cause a large positive stimulus to the economy through the bank lending channel.

Read the paper here (.pdf)

Host: Hans Holter

Published Oct. 10, 2016 10:30 AM - Last modified May 9, 2017 11:29 AM