Event Details

Economic Research Seminar

Abtract: Using a large sample of euro area firms and creating a relevant sentiment index for European Central Bank (ECB) press conferences and speeches, we uncover a link between monetary policy communications and corporate decision making. ECB’s communications have a significant and asymmetric effect on corporate cash holdings and this effect is mainly driven by the ECB’s irregular speeches. The monetary policy communication channel mainly affects firms located in Core countries and firms with higher level of excess cash holdings. Our key results remain valid under various robustness checks.