Investment dynamics and monetary policy shocks: Evidence from EMU family firms

This paper examines family firms’ response to monetary policy tightening. By using a panel of about 130,000 non-listed EMU firms over the period 2011–2021, we show that family firms are more resilient to monetary policy shocks. Compared to non-family firms, they react to interest rate hikes by reducing tangible investments to a lesser extent. Fully family-controlled firms suffer a lower reduction in revenue and reallocate their debt from short to long term liabilities. Our results provide evidence of the existence of a corporate-ownership transmission channel. The presence of family firms appears to be an additional source of heterogeneity in response to monetary policy.