Monetary Policy Transmission through Cross-Selling Banks

Christoph Basten and Ragnar Juelsrud

No 20507, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show theoretically how the anticipated cross-selling of loans incentivizes banks to offer lower deposit spreads to attract and retain depositors, more when policy rates are lower and future cross-selling is more valuable. Utilizing comprehensive data on every Norwegian bank household relationship, we then establish empirically how banks facing identical loan demand respond to policy rate cuts with greater deposit spread reductions for clients with higher cross-selling potential, thereby raising both deposit and loan growth. Cross-selling constitutes a complementary, novel channel for monetary policy transmission through banks, elucidates loss-making deposit pricing in low-rate periods, and connects banks’ deposit and loan franchises.

JEL-codes: D14 D43 E52 G21 G51 (search for similar items in EconPapers)
Date: 2025-07
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