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GFO 2022-08-03 - final for SSRN.pdf (1.99 MB)

The asset reallocation channel of quantitative easing. The case of the UK

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journal contribution
posted on 2024-03-26, 16:46 authored by Simone Giansante, Mahmoud Fatouh, Steven Ongena

 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 securities, 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 effectiveness of expansionary unconventional monetary policies and provide incentives for carry trade activities. 

History

Author affiliation

School of Business, University of Leicester

Version

  • AM (Accepted Manuscript)

Published in

Journal of Corporate Finance

Volume

77

Pagination

102294

Publisher

Elsevier BV

issn

0929-1199

Copyright date

2022

Available date

2024-03-26

Language

en

Data Access Statement

The data that has been used is confidential.

Rights Retention Statement

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