IN THE LOW INTERESTS TRAP

Krasimira Naydenova ()
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Krasimira Naydenova: University of National and World Economy Sofia, Bulgaria

Economic Science, education and the real economy: Development and interactions in the digital age, 2020, issue 1, 441-451

Abstract: Interest rates with a value of zero or around zero do not automatically lead to improvement of financial conditions in Bulgaria. Low interest rates on loans are delayed by years compared to Europe and the United States, further reducing competitiveness. The high uncertainty stemming from zero interest rates keeps savings in cash and far from the much needed investment by the economy. Risk-free return is de facto negative and undermines the return realized by financial intermediaries. The capital market in Bulgaria remains far from pre-crisis levels and its unattractiveness is a factor limiting investment activity by both savers and companies.

Keywords: interest rate; risk free rate; zero or negative rate; liquidity trap; capital market (search for similar items in EconPapers)
JEL-codes: G10 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrn:cfdide:y:2020:i:1:p:441-451

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