Passing on negative interest rates

Stadtmann Georg (), Moritz Karl-Heinz (), Berthold Kristin () and Stadtmann Tobias ()
Additional contact information
Stadtmann Georg: Europa-Universität Viadrina, Germany
Moritz Karl-Heinz: Fachhochschule Erfurt, Germany
Berthold Kristin: Europa-Universität Viadrina, Germany
Stadtmann Tobias: Robert Schuman Berufskolleg, Germany

International Journal of Management and Economics, 2020, vol. 56, issue 4, 283-290

Abstract: Since the ECB has lowered the interest rate on deposits into negative territory, more and more commercial banks are also passing on this negative interest rate to their customers. The main aim of this paper is to answer the question under which conditions the commercial banking sector will be more or less reluctant to pass the negative deposit rate on to its private customers. We first clarify the circumstances under which demand deposits and excess liquidity arise, and what role quantitative easing plays in this context. Within a game-theoretical framework, it is derived that the pressure to pass on the negative interest rate is particularly high if there are no switching costs, and the banking market follows a Bertrand competition.

Keywords: excess liquidity; penalty interest; game theory; investor behavior (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/ijme-2020-0022 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:ijomae:v:56:y:2020:i:4:p:283-290:n:1

DOI: 10.2478/ijme-2020-0022

Access Statistics for this article

International Journal of Management and Economics is currently edited by Mariusz Próchniak

More articles in International Journal of Management and Economics from Warsaw School of Economics, Collegium of World Economy
Bibliographic data for series maintained by Peter Golla ().