The effects of quantitative easing on nonperforming loans. Did the ECB's quantative easing policy really help reduce nonperforming loans on the balance sheets of Eurozone banks?
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2019-08-29
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en
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The European central bank have initiated its quantitative easing policy to boost inflation in the eurozone, reduce yields and interest rates. To some extent, this policy has achieved all of these goals with varying degrees of success as some might argue. however, how does this unconventional monetary policy affect the issue of nonperforming loans on the balance-sheets of Eurozone banks. As the nonperforming loans are intricately linked to the interest rates as well as other macroeconomic determinants, it would be interesting to see if this policy have influenced the nonperforming loans ratios. Using Arellano and Bond difference GMM estimator, this thesis attempts to find what effect did this policy have on nonperforming loan. The results suggest that the effect was partially channeled through ex-ante channels such as interest rates. However, evidence of the announcement reducing the nonperforming loans was weak, especially when accounting for changes in the economy as well as the bank’s financial position.
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Faculteit der Managementwetenschappen