Report
Patrick Artus

Could the expansionary monetary policy now be positive for companies?

The expansionary monetary policy currently being pursued in OECD countries is clearly: Positive for governments, since it keeps them fiscally solvent; Positive for asset owners, since it drives up asset prices. This second characteristic is also often criticised. But could an expansionary monetary policy also be positive for companies and boost their investment? This is the case if: It drives down yields on corporate bonds as much as those on government bonds; we see that this is not the case; Investment reacts to the rise in companies' market value (via the Tobin's q mechanism). We see that this is clearly the case. The expansionary monetary policy therefore also boosts corporate investment via the market valuation effect (Tobin's q); it is not only positive for governments and owners of financial and real estate assets .
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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