Forward Guidance and Corporate Lending
| Autor: | Dennis Philip, Manthos D. Delis, Nikos Paltalidis, Sizhe Hong |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
History Measure (data warehouse) Polymers and Plastics Monetary policy Monetary economics Syndicate Forward guidance Industrial and Manufacturing Engineering Test (assessment) Open market operation Loan Central bank Accounting Business Business and International Management Finance |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 1572-3097 |
| DOI: | 10.2139/ssrn.3520170 |
| Popis: | We suggest that forward guidance, via publicly committing the central bank to future actions and creating associated expectations, fundamentally affects bank lending decisions independently of other forms of monetary policy. To test this hypothesis, we build a forward guidance measure based on the language used in the Federal Open Market Committee meetings and match this measure with syndicated loans. Our results show that expansionary forward guidance decreases corporate loan spreads and that this effect is stronger for well-capitalized banks lending to riskier firms. Forward guidance also affects nonprice lending terms, such as covenants, performance pricing provisions, and the loan syndicate structure. Additionally, banks tend to initiate new lending relationships with lower spreads after forward guidance issuance. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|