QE and the Bank Lending Channel in the United Kingdom

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

No 1523, Discussion Papers from Centre for Macroeconomics (CFM)

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; Quantative Easing (search for similar items in EconPapers)
JEL-codes: E51 E52 G20 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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http://www.centreformacroeconomics.ac.uk/Discussio ... MDP2015-23-Paper.pdf (application/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:cfm:wpaper:1523

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