QE and the Bank Lending Channel in the United Kingdom

Nick Butt, Rohan Churm, Michael McMahon, Arpad Morotz and Jochen Schanz
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Nick Butt: Bank of England
Arpad Morotz: Bank of England

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We test whether quantitative easing (QE), in addition to boosting aggregate demand and inflation via portfolio rebalancing channels, operated through a bank lending channel (BLC) in the UK. Using Bank of England data together with an instrumental variables approach, we find no evidence of a traditional BLC associated with QE. We show, in a simple framework, that the traditional BLC is diminished if the bank receives `flighty' deposits (deposits that are likely to quickly leave the bank). We show that QE gave rise to such flighty deposits which may explain why we find no evidence of a BLC.

Keywords: Monetary policy; Bank lending channel; Quantitative Easing JEL Classification: E51, E52, G20 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-mac and nep-mon
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Citations: View citations in EconPapers (3)

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http://www2.warwick.ac.uk/fac/soc/economics/resear ... 244-2015_mcmahon.pdf

Related works:
Working Paper: QE and the Bank Lending Channel in the United Kingdom (2015)
Working Paper: QE and the Bank Lending Channel in the United Kingdom (2015)
Working Paper: QE and the Bank Lending Channel in the United Kingdom (2015)
Working Paper: QE and the Bank Lending Channel in the United Kingdom (2015)
Working Paper: QE and the bank lending channel in the United Kingdom (2015)
Working Paper: QE and the Bank Lending Channel in the United Kingdom (2015)
Working Paper: QE and the bank lending channel in the United Kingdom (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:244

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