Negative policy rates increases risk-taking by high-deposit banks - ECB paper
Eurozone banks with high deposit levels changed lending patterns after 2014- researchers
“Negative policy rates affect the supply of bank credit in a novel way,” a working paper published by the European Central Bank argues.
In Life below zero: bank lending under negative policy rates, Florian Heider, Farzad Saidi and Glenn Schepens compare the lending behaviour of eurozone banks with different deposit ratios before and after the ECB set negative policy rates in June 2014.
The authors find banks are reluctant to pass on negative rates to their depositors. This, they say,
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