Other Financial Corporations: Cinderella or Ugly Sister of Empirical Monetary Economics?

Bank of England Working Paper No. 151

Cass Business School Research Paper

28 Pages Posted: 16 Jan 2002

See all articles by K. Alec Chrystal

K. Alec Chrystal

Cass Business School - Faculty of Finance

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

Date Written: December 2001

Abstract

This paper reports estimates of an econometric model of the determinants of OFCs' broad money holding and M4 lending to OFCs. This is of interest as it gives information about a component of UK money and credit aggregates, and also because it provides some evidence of the link between financial activity and growth of the real economy. The long-run equilibria for money holding and lending to this sector are modelled as being driven by GDP, wealth, the return to financial services and various interest rate spreads. The dynamics of OFCs' money and lending are shown to be interdependent. The evidence for interactions between OFCs and other sectors are then considered. The results indicate that M4 lending to OFCs is significantly related to aggregate investment in the long run, but is largely unrelated to the spending of households.

JEL Classification: E41

Suggested Citation

Chrystal, K. Alec and Mizen, Paul, Other Financial Corporations: Cinderella or Ugly Sister of Empirical Monetary Economics? (December 2001). Bank of England Working Paper No. 151, Cass Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=296826 or http://dx.doi.org/10.2139/ssrn.296826

K. Alec Chrystal (Contact Author)

Cass Business School - Faculty of Finance ( email )

London, EC2Y 8HB
Great Britain
+44 20 7040 0159 (Phone)
+44 20 7040 0287 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/faculty/a.chrystal/

Paul Mizen

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5479 (Phone)
+44 115 951 4159 (Fax)

Bank of England

Threadneedle Street
London, EC2R 8AH
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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