QE and the bank lending channel in the United Kingdom

Nick Butt, Rohan Churm, Michael McMahon, Arpad Morotz and Jochen Schanz

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 (search for similar items in EconPapers)
JEL-codes: E51 E52 G20 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://eprints.lse.ac.uk/86286/ Open access version. (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:ehl:lserod:86286

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