Belinda Tracey


I am a research economist at the Bank of England. I am also the managing editor of the Bank of England's staff blog, Bank Underground. I joined the Bank of England in 2010 and took a period of study leave from 2012 to 2015. I obtained a D.Phil. (Ph.D.) in Economics from the University of Oxford in December 2016, where my academic advisers were Andrea Ferrero and Sophocles Mavroeidis and my college adviser was John Muellbauer. I also have an MSc Finance and Economics from the London School of Economics, and a BCom (Hons) Econometrics and a BSc Statistics from the University of Sydney.

Here is my Google Scholar and RePEc listing.

Research interests

My research interests include: banking, macro-financial linkages, firm dynamics and housing. To explore related questions, I use both empirical (panel and micro data) and theoretical (computational macro) techniques.

Published papers

Too Big to be Efficient? The Impact of Implicit Subsidies on Estimates of Scale Economies for Banks

(with R. Davies) (2014), Journal of Money, Credit and Banking, vol. 46(s1), pp. 219-253

Abstract: We examine whether “too-big-to-fail” (TBTF) factors affect estimates of scale economies for large banks. From a standard model of bank production that does not control for any TBTF factors, we find evidence of scale economies for our sample of large banks. We then control for TBTF factors by using a measure of the “implicit subsidy” that emerges from a reduction in TBTF banks’ funding costs due to investor expectations of government support. We do this in two ways: first, we estimate scale economies from an augmented model of bank production that employs a proxy for the counterfactual price of debt that banks would face in the absence of any TBTF funding cost advantage; second, we estimate scale economies from a model of bank production that is estimated only for a sample of banks considered unlikely to be TBTF. After controlling for TBTF factors using either method, we no longer find evidence of scale economies for our sample of large banks. These results suggest that estimated scale economies for large banks are affected by TBTF factors.

Working papers

Bank Capital and Risk-taking: Evidence from Misconduct Provisions

(with R. Sowerbutts)

Abstract: Over the last decade, banks around the world have been confronted with substantial misconduct costs. We employ provisions for misconduct issues as an instrumental variable to identify the causal effect of a bank capital shock on risk-taking. Using new hand-collected data, we show that misconduct provisions have adversely affected capital ratios across U.K. banks. Our instrumental variable approach additionally exploits an important difference in timing between current risk-taking and the past misconduct that current misconduct provisions refer to. Our main finding is that a negative bank capital shock causes an increase in risk-taking in the U.K. mortgage market.

The Real Effects of Zombie Lending in Europe

Abstract: Forbearance lending occurs when a lender supports an otherwise insolvent borrower. Around 10 per cent of European firms were in receipt of loan forbearance in 2014, following the peak of the sovereign debt crisis. To what extent did such lending practices contribute to the low output experienced by the euro area around this period? We address this question by developing a quantitative model of firm dynamics in which liquidations and forbearance lending arise endogenously. Our findings suggest that forbearance lending had negative consequences for output, investment and productivity in the euro area following the onset of the sovereign debt crisis.

Work in progress

Credit Supply and the Housing Market

Default Risk and Equity Finance over the Business Cycle