Other factors unique to the current financial environment may also be weighing on the ability of small businesses to borrow. A significant portion of small businesses rely on the owners’ personal assets and credit to fund their operations. As a result, small businesses are affected by tight consumer credit conditions, in addition to an unfavorable business credit climate.
Although these policies supported the economy by providing accommodative financial conditions, they were unable to change entrenched deflationary expectations among households and firms. Theories on the ZIRP and QE Let us look at developments in monetary policy theory at the time that the Bank was conducting the ZIRP and QE.