An international team of researchers headed by Loriana Pelizzon, SAFE Professor of Law and Finance, has received a large research grant by the Volkswagen Foundation. The grant has been awarded for a period of three years for a research project on “Quantitative Easing and Financial (In)Stability”. Apart from Loriana, the contributing researchers are: Jan Pieter Krahnen, Christian Schlag, Matthias Thiemann, (all Goethe University and SAFE) and Sascha Steffen (SAFE Fellow and ESMT), Jun Uno (Waseda University Japan), Marti Subrahmanyam and Viral Acharya (New York University), Marcel Bluhm and Linlin Niu (Xiamen University, China), and Co-Pierre Georg (University of Cape Town, South Africa).
There are still many open questions about the effectiveness and the global impact of new central bank policy tools to provide liquidity to the markets – such as quantitative easing (QE). These policies (and unwinding them later on) have an impact on the stability of financial markets and financial institutions, not only in the industrialized countries but also in emerging markets. The funded project aims to analyze the potential effects of QE on (i) the pricing of financial assets, (ii) the risk taking by banks, and (iii) the spillover effects to emerging markets. The project proposes a new approach to address the topic from the banking and finance perspective.