One size fits all? Effects of the zero lower bound on bank lending across countries

Jacob Bratshaug Lauritzen

Journal of International Financial Markets, Institutions and Money, 2022, vol. 81, issue C

Abstract: This paper documents significant cross-country heterogeneity in the effects of negative policy rates on bank lending. When policy rates go negative, high-deposit banks decrease loan extension relative to low-deposit ones, but only in countries where deposit rates were already close to the zero lower bound before the introduction of negative policy rates. In countries where deposit rates were higher, no contractionary effect is found. Previous studies, which treat all euro area countries as one entity, are likely to underestimate the true effect of negative rates on bank lending.

Keywords: Bank lending; Interest rates; Lower bound; Negative rates (search for similar items in EconPapers)
JEL-codes: E44 E51 E52 E58 G21 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:81:y:2022:i:c:s1042443122001445

DOI: 10.1016/j.intfin.2022.101672

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