<p>This paper investigates how Japan’s unconventional monetary policy influenced bank lending across sectors, moving beyond the traditional focus on aggregate credit outcomes. We construct a panel dataset of regional banks classified by industry and employ dynamic panel models to examine how monetary policy shocks shaped the allocation of credit across sectors. Our findings indicate that quantitative easing (QE) had only limited effects on total bank lending and failed to stimulate manufacturing lending; if anything, its effect on manufacturing was negative. In contrast, monetary easing persistently increased lending to real estate-related activities, especially during the quantitative and qualitative easing period, when banks with greater exposure to real estate lending expanded overall credit more aggressively. Liquidity injections by the Bank of Japan were disproportionately directed toward collateral-intensive sectors. These results suggest that the modest macroeconomic impact of QE in Japan reflects not only modest aggregate lending responses, but also an uneven sectoral distribution of credit. For central banks implementing unconventional policies, monitoring sectoral credit allocation may be as important as tracking its aggregate volume.</p>