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Does the deposits channel work under a low interest rate environment?

Ana Sa () and José Jorge

Economics Letters, 2019, vol. 185, issue C

Abstract: According to the deposits channel of monetary policy, central banks can influence the deposits holdings and the loan supply by changing the policy rate. This paper discusses the generality of this channel and shows that low interest rates may turn this channel off. This result contributes to the literature on unintended effects of monetary policy and banks’ profitability in a low interest rate environment.

Keywords: Deposits channel; Monetary policy; Low interest rates; Bank profitability (search for similar items in EconPapers)
JEL-codes: E43 E52 E58 G12 G21 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econlet.2019.108736

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