【Abstract】

The operation of the portfolio balance channel has been emphasized by monetary policymakers as a key channel through which quantitative easing (QE) policies work. We assess whether the investment behavior of insurance companies and pension funds in the United Kingdom during the global financial crisis was consistent with such an effect by analyzing both sectoral and institution-level data. Our results suggest QE led to institutional investors shifting their portfolios away from government bonds toward corporate bonds but did not lead to a shift into equities.

【Keywords】

institutional investors, asset allocation, quantitative easing, portfolio balance channel, global financial crisis

【Authors】

Michael A.S. Joyce, Research Economist, Deutsche Bundesbank

Zhuoshi Liu, Research Fellow, International Monetary Institute, Renmin University of China

Ian Tonks, Professor of Finance, School of Management, University of Bath