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Credit easing versus quantitative easing: evidence from corporate and government bond purchase programs

Author

Listed:
  • Stefania D’Amico

    (Federal Reserve Bank of Chicago)

  • Iryna Kaminska

    (Bank of England)

Abstract

Using security-level data, we analyse the effects of the Bank of England’s multiple rounds of gilt purchases (aka Quantitative Easing, QE) and its Corporate Bond Purchase Scheme (aka Credit Easing, CE) on corporate bond prices and issuance. This allows direct estimation of (i) QE’s cross-asset supply effects and (ii) the joint supply effects of QE and CE. We show that in the case of QE alone, the pass-through of the gilt supply shock to corporate bond prices is significant, is larger in the longer-run than at announcement, and is often limited to the default-free component of the corporate yield. In the case of the joint conduct of QE and CE, we find that the CE is more effective than QE in reducing credit spreads, especially for higher-rated bonds, and in stimulating corporate bond issuance, which responds quite rapidly to the corporate bond supply shock.

Suggested Citation

  • Stefania D’Amico & Iryna Kaminska, 2019. "Credit easing versus quantitative easing: evidence from corporate and government bond purchase programs," Bank of England Staff Working Paper series 825, Bank of England.
    • Handle: RePEc:boe:boeewp:0825
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    References listed on IDEAS

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    Cited by:

    1. Egemen Eren & Denis Gorea & Daojing Zhai, 2025. "How do quantitative easing and tightening affect firms?," BIS Working Papers 1286, Bank for International Settlements.
    2. Yuriy Kitsul & Oleg Sokolinskiy & Jonathan H. Wright, 2022. "Market Effects of Central Bank Credit Markets Support Programs in Europe," International Finance Discussion Papers 1357, Board of Governors of the Federal Reserve System (U.S.).
    3. Yun Gao & Kenichi Ueda, 2024. "Loan Screening When Banks Have Superior Information Technology," CARF F-Series CARF-F-580, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    4. Lena Boneva & David Elliott & Iryna Kaminska & Oliver Linton & Nick McLaren & Ben Morley, 2022. "The Impact of Corporate QE on Liquidity: Evidence from the UK," The Economic Journal, Royal Economic Society, vol. 132(648), pages 2615-2643.
    5. Maren Froemel & Michael Joyce & Iryna Kaminska, 2022. "The local supply channel of QE: evidence from the Bank of England’s gilt purchases," Bank of England Staff Working Paper series 980, Bank of England.
    6. Yun Gao & Kenichi Ueda, 2025. "Loan Screening under Symmetrically Imperfect Information," CARF F-Series CARF-F-614, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    7. Grahame Johnson & Sharon Kozicki & Romanos Priftis & Lena Suchanek & Jonathan Witmer & Jing Yang, 2020. "Implementation and Effectiveness of Extended Monetary Policy Tools: Lessons from the Literature," Discussion Papers 2020-16, Bank of Canada.
    8. Stefania D'Amico & Tim Seida, 2020. "Unexpected Supply Effects of Quantitative Easing and Tightening," Working Paper Series WP-2020-17, Federal Reserve Bank of Chicago.
    9. Andrew Bailey & Jonathan Bridges & Richard Harrison & Josh Jones & Aakash Mankodi, 2020. "The central bank balance sheet as a policy tool: past, present and future," Bank of England Staff Working Paper series 899, Bank of England.
    10. Jan Kakes & Tom Hudepohl & Casper de Haes, 2025. "The local supply effect of asset purchases: evidence from the Eurosystem's CSPP," Working Papers 837, DNB.
    11. Gilchrist, Simon & Wei, Bin & Yue, Vivian Z. & Zakrajšek, Egon, 2024. "The Fed takes on corporate credit risk: An analysis of the efficacy of the SMCCF," Journal of Monetary Economics, Elsevier, vol. 146(C).
    12. Mark A. Carlson & Stefania D'Amico & Cristina Fuentes-Albero & Bernd Schlusche & Paul R. Wood, 2020. "Issues in the Use of the Balance Sheet Tool," Finance and Economics Discussion Series 2020-071, Board of Governors of the Federal Reserve System (U.S.).
    13. Holm-Hadulla, Fédéric & Leombroni, Matteo, 2025. "Heterogeneous intermediaries in the transmission of central bank corporate bond purchases," Working Paper Series 3101, European Central Bank.
    14. Valentina Bruno & Michele H. Dathan & Yuriy Kitsul, 2024. "Corporate Bond Issuance Over Financial Stress Episodes: A Global Perspective," International Finance Discussion Papers 1390, Board of Governors of the Federal Reserve System (U.S.).
    15. Billio, M. & Busetto, F. & Dufour, A. & Varotto, S., 2025. "Bond supply expectations and the term structure of interest rates," Journal of International Money and Finance, Elsevier, vol. 150(C).
    16. Stefania D'Amico & Vamsi Kurakula & Stephen M. Lee, 2020. "Impacts of the Fed Corporate Credit Facilities through the Lenses of ETFs and CDX," Working Paper Series WP-2020-14, Federal Reserve Bank of Chicago.
    17. Andrew Bailey & Jonathan Bridges & Richard Harrison & Josh Jones & Aakash Mankodi, 2025. "The Central Bank Balance Sheet As a Policy Tool: Lessons From the Bank of England's Experience," Journal of Financial Services Research, Springer;Western Finance Association, vol. 67(1), pages 5-30, April.

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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