Research

Working Papers

Corporate debt structure and heterogeneous monetary policy transmission

with Nuno Coimbra and Urszula Szczerbowicz

[BdF Working Paper 933] [CEPR Discussion Paper] [VoxEU]

Using French firms’ balance sheet data, we show that corporate debt structure plays a significant role in ECB monetary policy transmission. In addition to interest rate policy, we analyse the impact of a novel ECB-induced bond liquidity shock. While both types of policy tightening diminish French firms’ investment, the transmission of conventional monetary policy shocks is stronger for firms with a higher share of bank debt. Conversely, contractionary bond liquidity shocks lower investment more for firms with higher bond shares of total debt. We further investigate the transmission channels and show that bond liquidity tightening reduces French sovereign bond market liquidity and leads to higher bond-bank loan interest rate spreads and lower bond issuance.

Presented at EABCN Conference: New Challenges in Monetary Economics 2024 (poster), JIE Summer School 2024 (poster), Workshop on New insights from financial statements 2024.

Work in Progress

Bidding for the Environment: Allocation Independence in Cap-and-Trade Systems

with Benjamin Hattemer