Unconventional monetary policy and aggregate bank lending: Does financial structure matter?

This paper addresses a previously unexamined intersection between the financial structure literature and the unconventional monetary policy literature. First it examines how differences in financial structure -the mix of financial instruments, markets, and intermediaries, have been responsible for differences in approach to unconventional monetary policy between the Bank of Japan and the Federal Reserve. Then, by conducting multivariate time-series analyses, this paper shows empirically to what extent differences in financial structure between Japan and the U.S. have affected the relationship between unconventional monetary policy and aggregate bank lending. The results indicate that financial structure should be thought of as an important factor determining the approach and effects of unconventional monetary policy.