Skip to main content

Portfolio Rebalancing Following the Bank of Japan's Government Bond Purchases

: Empirical Analysis Using Data on Bank Loans and Investment Flows

June 19, 2014
Masashi Saito*1
Yoshihiko Hogen*2
Monetary Affairs Department
Bank of Japan


This paper organizes facts and conducts an empirical analysis related to the portfolio rebalancing effect of government bond purchases by the Bank of Japan (BOJ). Our analysis uses data on bank loans and investment flows that are classified by type of entity, primarily taken from the Flow of Funds Accounts Statistics. Following the introduction of Quantitative and Qualitative Monetary Easing (QQE) by the BOJ in April 2013, entities other than the BOJ, as a group, have increased loans and investment in equities, mutual funds, and corporate bonds in Japan, while reducing their holdings of Japanese government bonds. Such portfolio rebalancing is mainly led by domestic banks and nonresidents. Meanwhile, so far, insurance companies, corporate pension funds, and public pensions have not reduced government bond holdings when the BOJ purchased government bonds. In addition to changes in financial and economic conditions, such as the balance sheet conditions of domestic banks and loan demand faced by domestic banks, purchases of government bonds with a longer remaining maturity by the BOJ have played a role in the increase in bank loans observed during the QQE period.

portfolio rebalancing, government bond purchases, Quantitative and Qualitative Monetary Easing (QQE), Flow of Funds Accounts Statistics

JEL Classifications
E52, E58, G11, G2, H63

Shusaku Nishiguchi and Rie Yamaoka helped in preparing some of the data used in this paper. Staff members at the Bank of Japan provided useful comments. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Bank of Japan.

  • *1E-mail :
  • *2E-mail :


Please contact below in advance to request permission when reproducing or copying the content of this paper for commercial purposes.
Please credit the source when reproducing or copying the content of this paper.


Policy Studies Division, Monetary Affairs Department

Tel : +81-3-3279-1111