Zombies on the Brink: Evidence from Japan on the Reversal of Monetary Policy Effectiveness PDF Download

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Zombies on the Brink: Evidence from Japan on the Reversal of Monetary Policy Effectiveness

Zombies on the Brink: Evidence from Japan on the Reversal of Monetary Policy Effectiveness PDF Author: Mr.Gee Hee Hong
Publisher: International Monetary Fund
ISBN: 151357003X
Category : Business & Economics
Languages : en
Pages : 41

Book Description
How does unconventional monetary policy affect corporate capital structure and investment decisions? We study the transmission channel of quantitative easing and its potential diminishing returns on investment from a corporate finance perspective. Using a rich bank-firm matched data of Japanese firms with information on corporate debt and investment, we study how firms adjust their capital structure in response to the changes in term premia. Investment responds positively to a reduction in the term premium on average. However, there is a significant degree of cross-sectional variation in firm response: healthier firms increase capital spending and cash holdings, while financially vulnerable firms take advantage of lower long-term yields to refinance without increasing investment.
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