The acquisition of interest-bearing assets by the U.K. private sector

Miller, John Hunter (1977) The acquisition of interest-bearing assets by the U.K. private sector. University of Southampton, Doctoral Thesis.

Abstract

This study examines the determinants of the allocation of private sector funds between four classes of interest-bearing assets. It is based on the aggregation of models of the portfolio cho iic of both individual and corporate investors. For the latter the model follows the usual assumption that firms reallocate their funds according to changing circumstances. However, it is assumed that individuals do not reallocate funds because of high transactions costs. They are only concerned with how to invest current savings. The variables in the regressions reflect the behaviour of both sub-groups and also aggregation effects. Both this model and a version of the Brainard-Tobin model give results that tend to support the main behavioural hypotheses, though they do contain some problems. This pattern is also followed by results of the further study of the choice between assets only held by individuals. The results have several economic implications. For example, controls on banks can be offset by funds going through other channels, the authorities cannot always control the gilt-edged market, and excess holdings of monetary assets do not last long.

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