scholarly journals Quantitative Easing, Portfolio Rebalancing and Credit Growth: Micro Evidence from Germany

2018 ◽  
Author(s):  
Johannes Tischer
Keyword(s):  
Quantitative Easing ◽  
Credit Growth ◽  
Portfolio Rebalancing

ECB QE will boost credit growth, but not soon

2015 ◽  
Keyword(s):  
Private Sector ◽  
Asset Price ◽  
Quantitative Easing ◽  
Press Conference ◽  
Private Debt ◽  
Credit Growth ◽  
Content Type ◽  
Portfolio Rebalancing ◽  
Price Bubble ◽  
Private Credit

Subject Is quantitative easing helping credit growth? Significance Economists are questioning whether the ECB's sovereign quantitative easing (QE) programme is boosting private credit growth, one of the key objectives of QE. At his June press conference, ECB President Mario Draghi said that "the dynamics of loans to non-financial corporations remain subdued". This followed his comments in May that the private sector is still "hesitant to take on economic risk". Impacts Regardless of encouraging signals from the credit front, both real borrowing costs and private debt ratios remain high. The QE programme's goal is encouraging banks to make new loans to corporates and households. QE also aims to trigger portfolio rebalancing from bonds to equities. If non-financial companies do not issue more equities or bonds, higher bank demand will fuel an asset price bubble.

scholarly journals Banks’ Holdings of Government Securities and Credit to the Private Sector in Emerging Market and Developing Economies

2019 ◽  
Vol 19 (224) ◽  
Author(s):  
Romain Bouis
Keyword(s):  
Private Sector ◽  
Banking Sector ◽  
Developing Economies ◽  
Emerging Market ◽  
Negative Relationship ◽  
Credit Growth ◽  
Financial Repression ◽  
Portfolio Rebalancing ◽  
Sector Analysis ◽  
The Government

This paper studies the relationship between banks’ holdings of domestic sovereign securities and credit growth to the private sector in emerging market and developing economies. Higher banks’ holdings of government debt are associated with a lower credit growth to the private sector and with a higher return on assets of the banking sector. Analysis suggests that the negative relationship between banks’ claims on the government and private sector credit growth mainly reflects a portfolio rebalancing of banks towards safer, more liquid public assets in stress times and provides only limited evidence of a crowding-out effect due to financial repression.

Euro-Area Quantitative Easing and Portfolio Rebalancing

2017 ◽  
Vol 107 (5) ◽  
pp. 621-627 ◽  
Author(s):  
Ralph S. J. Koijen ◽  
François Koulischer ◽  
Benoît Nguyen ◽  
Motohiro Yogo
Keyword(s):  
Mutual Funds ◽  
Euro Area ◽  
Home Bias ◽  
Pension Funds ◽  
Insurance Companies ◽  
Quantitative Easing ◽  
Government Bonds ◽  
Foreign Investors ◽  
Portfolio Rebalancing ◽  
Comprehensive Data

We use new and comprehensive data on the security holdings of euro-area investors to document facts about the ongoing quantitative easing program. The holdings of purchase-eligible government bonds have strong home bias not only for banks but also for insurance companies, pension funds, and mutual funds, especially in the vulnerable countries. In response to the program, foreign investors sold most of the purchase-eligible government bonds. Banks also sold purchase-eligible government bonds to a lesser extent, but insurance companies and pension funds bought them. Thus, quantitative easing may have reduced the duration mismatch for these institutions.

Diminishing Returns of QE from Portfolio Rebalancing

2018 ◽  
Keyword(s):  
Central Bank ◽  
Credit Spreads ◽  
Quantitative Easing ◽  
Excess Returns ◽  
Portfolio Rebalancing ◽  
Asset Risk ◽  
Diminishing Returns ◽  
Asset Purchases

The author shows in a CAPM framework that asset risk can be a serious impediment for the portfolio rebalancing channel of quantitative easing (QE). Investors are less willing to take higher risk when excess returns decline due to asset purchases by the central bank. The reduced effectiveness of QE holds in particular when credit spreads are compressed. This can explain why QE has diminishing returns.

scholarly journals Portfolio Rebalancing in Japan: Constraints and Implications for Quantitative Easing

2015 ◽  
Vol 15 (186) ◽  
pp. 1 ◽  
Author(s):  
Serkan Arslanalp ◽  
Dennis Botman ◽  
◽  
Keyword(s):  
Quantitative Easing ◽  
Portfolio Rebalancing

The Impact of Quantitative Easing on Emerging Markets – Literature Review

e-Finanse ◽  
2018 ◽  
Vol 14 (4) ◽  
pp. 67-76
Author(s):  
Piotr Bartkiewicz
Keyword(s):  
Emerging Markets ◽  
Large Scale ◽  
Empirical Literature ◽  
Quantitative Easing ◽  
Methodological Choices ◽  
The Subject ◽  
Methodological Approaches ◽  
The Impact ◽  
Sufficient Precision

AbstractThe article presents the results of the review of the empirical literature regarding the impact of quantitative easing (QE) on emerging markets (EMs). The subject is of interest to policymakers and researchers due to the increasingly larger role of EMs in the world economy and the large-scale capital flows occurring after 2009. The review is conducted in a systematic manner and takes into consideration different methodological choices, samples and measurement issues. The paper puts the summarized results in the context of transmission channels identified in the literature. There are few distinct methodological approaches present in the literature. While there is a consensus regarding the direction of the impact of QE on EMs, its size and durability have not yet been assessed with sufficient precision. In addition, there are clear gaps in the empirical findings, not least related to relative underrepresentation of the CEE region (in particular, Poland).

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