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Adapting lending policies in a “negative-for-long” scenario (Updated October 2020)

Óscar Arce (), Miguel Garcia-Posada (), Sergio Mayordomo () and Steven Ongena ()
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Óscar Arce: Banco de España

No 1832, Working Papers from Banco de España

Abstract: What is the long-term impact of negative interest rates on bank lending? To answer this question we construct a unique summary measure of negative rate exposure by individual banks based on exclusive survey data, and couple it with the credit register of Spain to identify this impact on the supply of credit to firms. We find that only after a few years of negative rates do affected banks (relative to non-affected banks) decrease their supply and increase their rates, especially when lowly capitalized and lending to risky firms. However, no firms are facing funding constraints, yet.

Keywords: negative interest rates; negative for long; lending policies; banks capital ratio; risk taking (search for similar items in EconPapers)
JEL-codes: E52 E58 G21 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-09, Revised 2020-10
New Economics Papers: this item is included in nep-ban, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed

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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... 18/Files/dt1832e.pdf Updated version, October 2020 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1832

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