ECB’s negative rates increased eurozone credit supply – IMF paper
Cuts above zero lower bound did not have same effects on banks, researchers find
The European Central Bank’s negative interest rate policy increased the eurozone’s credit supply and firm growth, a paper published by the International Monetary Fund finds.
Margherita Bottero et al. study the impact of negative rates by exploring the ECB’s adoption in 2014 using micro data from Italy.
Using loan-level data, they find that negative rates shift the entire yield curve downwards, inducing banks to rebalance their portfolios from liquid assets to credit supply.
“Previous rate
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