scholarly journals Monetary Policy and Bank Equity Values in a Time of Low Interest Rates

2018 ◽  
Author(s):  
Miguel Ampudia ◽  
Skander Van den Heuvel
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Equity Values ◽  
Low Interest Rates ◽  
Bank Equity

scholarly journals Loose Monetary Policy and Corporate Investment of Manufacturing Firms in the Czech Republic

2018 ◽  
Vol 18 (4) ◽  
pp. 371-385
Author(s):  
Veronika Kajurová ◽  
Dagmar Linnertová
Keyword(s):  
Monetary Policy ◽  
Czech Republic ◽  
Interest Rates ◽  
Corporate Investment ◽  
Manufacturing Firms ◽  
Investment Activity ◽  
The Czech Republic ◽  
Low Interest Rates ◽  
Negative Effect

Abstract The aim of the paper is to evaluate the effects of loose monetary policy on corporate investment of manufacturing firms in the Czech Republic during the period between 2006 and 2015. The main focus of the paper is on the effect of low interest rates on investment activity of Czech firms; additionally, the effects of interactions between interest rate and other firm-specific variables are investigated. The results indicate that corporate investment is positively associated with firm size, investment opportunities, and long term debt. Also, a negative effect of the cash position is found. Further, the findings show that monetary policy is a significant determinant of firm investment activity: when the monetary policy is loose, investment is positively affected. Furthermore, differences in the determinants of investment between highly and low leveraged firms were revealed.

scholarly journals Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy

e-Finanse ◽  
2015 ◽  
Vol 11 (2) ◽  
pp. 47-63
Author(s):  
Natalia Białek
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Institutional Design ◽  
Global Financial Crisis ◽  
European Central ◽  
Low Interest Rates ◽  
The Usa ◽  
The U.S

Abstract This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the U.S. Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008-09. Unusually low interest rates in 2001- 05 compelled investors to engage in high risk endeavors. It also encouraged some governments to finance excessive domestic consumption with foreign loans. Emerging financial bubbles burst first in mortgage markets in the U.S. and subsequently spread to other countries. The paper also reviews other causes of the crisis as discussed in literature. Some of them relate directly to weaknesses inherent in the institutional design of the European Monetary Union (EMU) while others are unique to members of the EMU. It is rather striking that recommended remedies tend not to take into account the policies of the European Central Bank.

Global Spillovers in a Low Interest Rate Environment

2019 ◽  
Author(s):  
Sushant Acharya ◽  
Paolo Pesenti
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Policy Debate ◽  
Monetary Policies ◽  
International Spillovers ◽  
The Great Recession ◽  
Financial Conditions ◽  
Global Demand ◽  
Low Interest Rates ◽  
Rate Environment

Global policy spillovers can be defined as the effect of policy changes in one country on economic outcomes in other countries. The literature has mainly focused on monetary policy interdependencies and has identified three channels through which policy spillovers can materialize. The first is the expenditure-shifting channel—a monetary expansion in one country depreciates its currency, making its goods cheaper relative to those in other countries and shifting global demand toward domestic tradable goods. The second is the expenditure-changing channel—expansionary monetary policy in one country raises both domestic and foreign expenditure. The third is the financial spillovers channel—expansionary monetary policy in one country eases financial conditions in other economies. The literature generally finds that the net transmission effect is positive but small. However, estimated spillovers vary widely across countries and over time. In the aftermath of the Great Recession, the policy debate has devoted special attention to the possibility that the magnitude and sign of international spillovers might have changed in an environment of low interest rates worldwide, as the expenditure-shifting channel becomes more relevant when the effective lower bound reduces the effectiveness of conventional monetary policies.

scholarly journals Geld verändert die Welt

2018 ◽  
Vol 87 (3) ◽  
pp. 65-81
Author(s):  
Reinhold Rickes
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Financial Intermediation ◽  
Savings Banks ◽  
The World ◽  
Low Interest Rates

Zusammenfassung: In Zeiten von Digitalisierung, Niedrigzinsen und Kryptogeld stehen viele ökonomische Prozesse und insbesondere die Finanzintermediation auf dem Prüfstand. Im vorliegenden Beitrag wird dabei die Rolle der Geldpolitik kritisch mit Blick auf ihre „Ultraexpansivität“ reflektiert und Spekulationsgefahren sowie Risiken der Veränderungen des Geldsystems analysiert. Im Finanzsektor ist entscheidend, wie zukünftige Regulierungen ausgestaltet werden. Summary: Money is changing the world. In times of digitization, low interest rates and cryptocurrency, many economic processes and especially financial intermediation are under scrutiny. In this article, the role of monetary policy is critically reflected with regard to its „ultra-expansionism“ and the necessity of further exit steps is discussed. In addition, the financial markets are being changed by the development of cryptocurrency. As a result, the associated risk of speculation poses a threat. In this context, it is also necessary to warn against the path towards a full-money system. After all, banks and savings banks are facing up to these challenges and mastering them. Therefore, it remains crucial to design further regulations with moderation and balance.

scholarly journals IS U.S. TECHNOLOGY SECTOR IN A BUBBLE?

2017 ◽  
pp. 379-394
Author(s):  
Sebastjan Strasek ◽  
Tadej Kelc
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Interest Rates ◽  
Quantitative Easing ◽  
Tax Rates ◽  
Technology Sector ◽  
The Great Depression ◽  
Current State ◽  
Low Interest Rates ◽  
The U.S

The paper is examines the issue if the U.S. technology sector is in the bubble. Our analysis is based on the study of relative indicators, especially on price-to-earnings ratio. We studied the last two historic bubbles and analyzed the current state on the U.S. stock market. We find that U.S. stock market is heavily overvalued, which can be argued with high values of the relative indicators compared to the historical average. Some of them indicate that market was valued higher only during the Great Depression in 1929 and during the technological bubble in 2000. Remarkably high values are the result of low interest rates and quantitative easing. The current expansive monetary policy is encouraging risky businesses and increasing margin debt. With potential abatement of tax rates and other measures of expansive fiscal politics, stock markets could reach even higher values.

scholarly journals The Normalization of the European Central Bank’s Monetary Policy from an Austrian Perspective

2018 ◽  
pp. 359-371
Author(s):  
Leef H. Dierks
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Quantitative Easing ◽  
Fixed Income ◽  
Fixed Income Securities ◽  
Market Prices ◽  
European Central ◽  
The Us ◽  
Low Interest Rates

After several years of historically low interest rates and quantitative easing, the European Central Bank (ECB) has finally started wind-ing down its ultra-accommodative monetary policy in late 2018. Among the first steps tapering its asset purchase programme (APP), which foresees monthly purchases of up to €30bn per month until September 2018 — «or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of infla-tion consistent with its inflation aim» (ECB, 2018a). By then, pur-chases of euro area fixed income securities on behalf of the ECB will have mounted to as much as €2,550bn or almost 90% of euro area GDP (€2,834bn in market prices in Q4 2017, the latest date for which data were available (ECB, 2018b)). Further, according to market esti-mates, the first hike of the main refinancing rate, which was slashed to 0% in March 2016, could emerge in Q1 2019, thereby following a tightening of the monetary policy the US Federal Reserve (FED) had already started in December 2015 (FED, 2015).

scholarly journals Thrift and Credit Cooperative Lending Channel under Prolonged Low-Interest Rates: The Case of Thailand

2020 ◽  
Vol 5 (2) ◽  
pp. 59-71
Author(s):  
Kovit Charnvitayapong
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Fixed Effects ◽  
Bank Lending ◽  
Annual Data ◽  
Lending Channel ◽  
Interaction Terms ◽  
Credit Cooperatives ◽  
Low Interest Rates ◽  
The Impact

Objective – Considerable research indicates that during times of prolonged low interest rates, commercial bank lending channels are less effective in conveying the impact of expansionary monetary policies. What is the impact of easy money policy through lending channels of non-banking financial institutions (NBFIs) such as thrift and credit cooperatives (TCCs) and why should this result occur? The objective of this study is to examine the effectiveness of monetary policy through TCC lending channels compared to bank lending channels from 2008 to 2017. Methodology/Technique – Annual data from 546 TCCs was used in this investigation. A fixed effects model for TCCs and random effect for banks were employed to examine the data. Two models of each institution, one with lagged interaction terms and the other with contemporaneous interaction terms, were tested and compared. The impact of institutional characteristics such as size, deposit, liquidity and equity, and macroeconomic variables such as GDP growth and yield spread, on lending channels were also examined. Finding – As expected, the results show that TCC lending channels respond positively to prolonged low interest rate policies, whilst bank lending channels respond negatively in one model. Thus, if monetary authorities wish to increase the effectiveness of expansionary monetary policy, TCCs should be allowed to develop under careful supervision. Novelty –This study concludes that incremental budgeting caused by regulation must be borne by TCCs. Type of Paper: Empirical. JEL Classification: E44 E51 E52 E58. Keywords: Thrift and Credit Cooperatives (TCCs); Prolonged Low-Interest Rates; Transmission Mechanism; Lending Channels; Fixed Effects. Reference to this paper should be made as follows: Charnvitayapong, K. 2020. Thrift and Credit Cooperative Lending Channel under Prolonged Low Interest Rates: The Case of Thailand, J. Bus. Econ. Review 5(2) 59 – 71 https://doi.org/10.35609/jber.2020.5.2(2)

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