Butt, Nick, Churm, Rohan, McMahon, Michael F., Morotz, Arpad and Schanz, Jochen (2015) QE and the Bank Lending Channel in the United Kingdom in the United Kingdom. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1073). (Unpublished)

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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 nd no evidence of a BLC.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HJ Public Finance
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Quantitative easing (Monetary policy), Monetary policy, Bank loans
Series Name:	Warwick economics research papers series (WERPS)
Publisher:	University of Warwick. Department of Economics
Place of Publication:	Coventry
ISSN:	0083-7350
Official Date:	October 2015
Dates:	Date Event October 2015 Available
Number:	1073
Number of Pages:	32
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Unpublished
Access rights to Published version:	Open Access (Creative Commons)

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