Quantitative Easing and Bank Lending: A Panel Data Approach

33 Pages Posted: 28 Aug 2014

See all articles by Michael Joyce

Michael Joyce

Bank of England - Monetary Analysis

Marco Spaltro

Bank of England

Date Written: August 22, 2014


Studies of the Bank of England’s quantitative easing (QE) policy have tended to focus on its impact on financial markets and the broader macroeconomy. Less attention has been given to the effect on banks’ balance sheets and bank lending. In this paper we use a new non-publicly available panel data set of UK banks to address this question. Based on the historical bank-level relationship between deposits and bank lending, our analysis suggests that the first round of the Bank’s QE purchases during 2009-10 may have led to a small but statistically significant increase in bank lending growth. These effects appear more important for small rather than large banks. Our evidence also suggests that QE had weaker effects on lending because of low levels of bank capital.

Keywords: banking, quantitative easing, panel data

JEL Classification: E52, G21

Suggested Citation

Joyce, Michael and Spaltro, Marco, Quantitative Easing and Bank Lending: A Panel Data Approach (August 22, 2014). Bank of England Working Paper No. 504, Available at SSRN: https://ssrn.com/abstract=2487793 or http://dx.doi.org/10.2139/ssrn.2487793

Michael Joyce (Contact Author)

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom
44 (0)207 601 4444 (Phone)

HOME PAGE: http://www.bankofengland.co.uk

Marco Spaltro

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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