Jelle Barkema, Maren Froemel and Sophie Piton Record-high firm exits make headlines, but who are the firms going out of business? This post documents three facts about the rising number of corporations dissolving using granular data from Companies House and the Insolvency Service. We show that the increase in dissolutions that have already materialised reflected … Continue reading Three facts about the rising number of UK business exits
Financial Stability
Laura Achiro, Gerry Gunner and Neha Bora A flow of funds framework is a way of understanding and tracking the movement of financial assets between different sectors of the economy. This blog specifically analyses UK corporate and household sectoral flows from 2000 to the present and highlights how this framework can reveal useful trends and … Continue reading Flow of funds and the UK real economy
Laura Achiro and Neha Bora Central banks in most advanced economies have tightened monetary policy by raising interest rates. Tighter financing conditions may make it harder for some businesses to refinance their debt or could mean they face less favourable terms when they do. This blog explores the extent to which bond maturities could crystallise … Continue reading How resilient are UK corporate bond issuers to refinancing risks?
Alice Crundwell and William Bennett Accurate measures of the number of firms at risk of failure are becoming increasingly important for policymakers, as corporate insolvencies are continuing to rise and interest rates are expected to remain higher than over much of the past decade. The share of vulnerable firms is often assessed by looking at … Continue reading Stressed or in distress? How best to measure corporate vulnerability
Daniel Norris, Elio Cucullo and Vasilis Jacovides When borrowers enter a fixed-rate mortgage, lenders test whether they could continue to afford their mortgage if interest rates were to increase by the time it comes to re-fix. This ‘stressing’ is designed to create additional resilience for borrowers and the financial system. Over the last two years, … Continue reading Mortgage affordability for borrowers who re-fixed in 2023
Julia Giese and Charlotte Grace In response to the global financial crisis, the Bank of England (BoE) began using Product-Mix Auctions (PMA) to provide liquidity insurance to financial institutions. The PMA, designed by Paul Klemperer, allows the quantity of funds lent against different types of collateral to react flexibly to the economic environment and market … Continue reading How auction design can make a difference: the case of the Bank’s Indexed Long-Term Repo Facility
Rebecca Freeman As another year draws to an end and the blog prepares for some downtime over the festive period, we wanted to take a look back at the blog in 2023. In case you missed any of our posts the first time round, the five most viewed posts for the year were: We hope … Continue reading Top 5 posts 2023
Fergus Cumming and Danny Walker Bank Rate has risen by more than 5 percentage points in the UK over the past couple of years. This has led to much higher mortgage rates for many people. In this post we analyse another potential source of pressure on mortgagors: the potential for falls in house prices to … Continue reading Why lower house prices could lead to higher mortgage rates
Kathleen Blake Artificial intelligence (AI) is an increasingly important feature of the financial system with firms expecting the use of AI and machine learning to increase by 3.5 times over the next three years. The impact of bias, fairness, and other ethical considerations are principally associated with conduct and consumer protection. But as set out … Continue reading Bias, fairness, and other ethical dimensions in artificial intelligence
Julia Giese, Michael McLeay, David Aikman and Sujit Kapadia Central banks have been using a range of monetary policy and macroprudential tools to maintain monetary and financial stability. But when should monetary versus macroprudential tools be used and how should they be combined? Our recent paper develops a macroeconomic model to answer these questions. We … Continue reading Unifying monetary and macroprudential policy