Weak banks undermined first round of QE – BoE paper
Undercapitalised banks took defensive measures rather than boosting lending, research finds
The weakness of the UK banking sector post-2009 undermined the Bank of England’s first round of quantitative easing in 2009, research published by the BoE finds.
Simone Giansante, Mahmoud Fatouh and Steven Ongena make use of confidential data on UK banks to assess the difference between those that participated in QE and those that did not.
They find that rather than increasing lending, banks that benefitted from QE tended to shift the composition of their assets towards central bank reserves
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