Zusammenfassung:
We analyse the effects of monetary policy on mergers and acquisitions (M&A) activity in the United States, both on the aggregate and the firm level. We find that aggregate M&A activity decreases significantly following a monetary policy shock. The aggregate results are confirmed by an analysis of the firm-level M&A activity from the perspective of the acquiring firm. We find that the likelihood of becoming an acquiror decreases significantly following a contractionary monetary policy shock. We find that the acquisition likelihood falls significantly more for relatively more financially constrained firms, suggesting a strong role for the credit channel in the transmission of monetary policy to firms' M&A decisions. We rationalize our empirical findings in a stylized partial-equilibrium model of the firm's M&A decision