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Expansionary Yet Different: Credit Supply and Real Effects of Negative Interest Rate Policy

Margherita Bottero, Camelia Minoiu, José-Luis Peydró, Andrea Polo, Andrea Presbitero and Enrico Sette

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: We show that negative interest rate policy (NIRP) has expansionary effects on bank credit supply and firm outcomes through a portfolio rebalancing channel. For identification, we exploit ECB’s NIRP and credit register, firm- and bank-level datasets. NIRP affects relatively more banks with higher ex-ante net interbank positions or more liquid balance sheets. More exposed banks reduce liquid assets, expand credit supply to ex-ante riskier firms, and cut rates, inducing sizable firm-level real effects. By shifting down and flattening the yield curve, NIRP differs from rate cuts just above the zero-lower-bound. We find no evidence of a contractionary retail deposit channel.

Keywords: negative nominal interest rates; firm-level real effects; Eurozone crisis; portfolio rebalancing; liquidity management (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 E52 E58 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-mac and nep-mon
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https://www.econstor.eu/bitstream/10419/224260/1/NIR_v40.pdf (application/pdf)

Related works:
Working Paper: Expansionary yet different: credit supply and real effects of negative interest rate policy (2020) Downloads
Working Paper: Expansionary yet different: credit supply and real effects of negative interest rate policy (2020) Downloads
Working Paper: Expansionary Yet Different: Credit Supply and Real Effects of Negative Interest Rate Policy (2019) Downloads
Working Paper: Expansionary Yet Different: Credit Supply and Real Effects of Negative Interest Rate Policy (2019) Downloads
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