Do banks invest in riskier securities in response to negative central bank interest rates?

Johannes Bubeck, Angela Maddaloni and Jose-Luis Peydro

Research Bulletin, 2020, vol. 70

Abstract: How do systemic banks in the euro area react to negative central bank interest rates? This article suggests that they do not generally pass negative rates on to their depositors, and that they search for yield by investing in riskier securities. Their investments are directed more towards securities issued by the private sector and denominated in dollars – in addition to euro. JEL Classification: E43, E52, E58, G01, G21

Keywords: Negative rates; Non-standard monetary policy; Reach-for-yield; Securities; Banks (search for similar items in EconPapers)
Date: 2020-04
Note: 282957
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