Monetary Policy Transmission Through Cross-Selling Banks

Christoph Basten and Ragnar Juelsrud
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Christoph Basten: University of Zurich; Swiss Finance Institute; CESifo (Center for Economic Studies and Ifo Institute)
Ragnar Juelsrud: Norges Bank

No 24-36, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We show theoretically and empirically how banks' opportunities to crosssell their depositors loans later affect monetary policy transmission. Expected later lending profits motivate banks to set lower deposit spreads to onboard and retain depositors, more the lower policy rates and the greater a bank's cross-selling opportunities. With data on every Norwegian bank household relationship, we exploit that loan cross-sales vary with demographics and so across municipalities. Comparing bank-municipality cells within each bank-year to control for refinancing needs, we find that banks with more cross-selling potential cut deposit spreads more following policy rate cuts and exhibit higher deposit and loan growth.

Keywords: deposit pricing; deposit spread; deposit channel of monetary policy; cross-selling; multi-product banking; multi-period banking; loan spread (search for similar items in EconPapers)
JEL-codes: D14 D43 E52 G21 G51 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2024-07
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2436

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