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Incentives for the finance sector: How the ECB affects banks' business assembling

Bernard Gilroy (), Alexander Golderbein (), Christian Peitz () and Nico Stöckmann ()
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Alexander Golderbein: Paderborn University
Christian Peitz: Paderborn University
Nico Stöckmann: Paderborn University

No 116, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: Central banks implement negative interest rate policies (NIRP) to incentivize economic subjects to spend and invest money for long term economic growth. Although nominal negative interest rates can not be effectively explained by economic theory, when inflation is included there are currently real negative interest rates in almost all industrial nations. We investigate the difference in banks' performances regarding their core business composition in the short run after zero interest rate policy is announced first. Assigning European banks in the interval from a pure commercial bank to an investment bank leads to the observed heterogeneity within the industry.

Keywords: Monetary Policy; Bank Profitability; Globalisation; Financial Crisis (search for similar items in EconPapers)
JEL-codes: E52 F65 G21 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2018-06
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
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Handle: RePEc:pdn:ciepap:116