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Domestic and foreign insurer corporate bond demand and monetary policy

Author

Listed:
  • Marcel Brambeer

    (University of Bonn)

  • Michael Joyce

    (National Institute of Economic and Social Research)

  • Alex Kontoghiorghes

    (Bank of England)

Abstract

UK insurance companies hold a large share of UK corporate bonds, while US insurers are also significant investors in dollar-denominated issues by UK firms. Using a unique security-level dataset combining UK and US regulatory transactions data, we study how UK and US monetary policy shocks affect the demand of life insurers for UK corporate bonds. Employing a panel local projections framework, we find that UK monetary tightening raises domestic insurer demand but reduces foreign demand, counteracting the overall demand impact. US monetary contractions generate similar asymmetries, increasing demand from UK insurers and decreasing it from US insurers. These patterns are consistent with differences in regulation, portfolio allocation incentives, and liability structures across UK and US insurers.

Suggested Citation

  • Marcel Brambeer & Michael Joyce & Alex Kontoghiorghes, 2026. "Domestic and foreign insurer corporate bond demand and monetary policy," Bank of England Staff Working Paper series 1210, Bank of England.
    • Handle: RePEc:boe:boeewp:023786
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2026/domestic-and-foreign-insurer-corporate-bond-demand-and-monetary-policy.pdf
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    More about this item

    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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