Economic Support during the COVID Crisis. Quantitative Easing and Lending Support Schemes in the UK

Mahmoud Fatouh, Simone Giansante and Steven Ongena
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Mahmoud Fatouh: Bank of England
Simone Giansante: University of Bath - School of Management

No 21-54, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We investigate how the interaction of the Brexit and COVID waves of the Bank of England’s quantitative easing with the leverage ratio capital requirements or government COVID lending support schemes affected bank business lending. We find that the former QE programme was particularly successful in increasing lending to nonfinancial businesses, except for QE-banks subject to the UK leverage ratio, suggesting that the latter ratio incentivized QE-banks to lend to business anyway. The government schemes helped expand lending especially to SMEs post QE COVID, indicating that complementing QE with other credit easing programmes can improve its impact on lending to the real economy. During COVID-stress, changes to the UK leverage ratio supported better market-making in securities markets, and additional QE liquidity boosted stronger repo market intermediation.

Keywords: Monetary policy; quantitative easing; bank lending; COVID-19 (search for similar items in EconPapers)
JEL-codes: E51 G21 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2021-04
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-isf, nep-mac and nep-mon
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Citations: View citations in EconPapers (9)

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Journal Article: Economic support during the COVID crisis. Quantitative easing and lending support schemes in the UK (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2154

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