6533b827fe1ef96bd12870ea
RESEARCH PRODUCT
The asset reallocation channel of quantitative easing. The case of the UK
Simone GiansanteMahmoud FatouhSteven Ongenasubject
Economics and EconometricsMonetary policyStrategy and ManagementBank lendingQuantitative easingBusiness and International Management10003 Department of Banking and FinanceFinance330 Economicsdescription
We investigate the impact of the Bank of England's asset purchase program (APP) on the composition of assets of UK banks with unique data on the received reserves injections. The Monetary Policy Committee (MPC) didn't expect there to be strong transmission of the APP's impact through the bank lending channel. We find that compared to the control group, treated banks reallocated their assets towards lower risk-weighted investments, such as government se-curities, but did not provide more credit to the real economy. Overall, our findings suggest that when banks are not adequately capitalised, risk-based capital constraints can limit the effec-tiveness of expansionary unconventional monetary policies and provide incentives for carry trade activities.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2022-12-01 |