Impact of Quantitative Easing on Bank Lending to Different Industries or Sectors

Abstract:

We empirically investigate the impact of the Bank of Japan’s (BOJ) monetary policy on the lending behaviors of regional banks during the period of quantitative easing (QE). We focus particularly on the credit supply from banks to different industries or sectors, with an emphasis on manufacturing and real estate-related industries. Our results indicate that the BOJ’s QE policy promoted bank lending to the estate-related industries or sectors but not to the manufacturing industry. Our findings align with recent studies on the limitations of overall credit supply in influencing the business cycle and economic growth. Furthermore, Our results suggest that the BOJ has limited ability to halt the recession through lending channels under the QE policy.