Expansionary yet different: credit supply and real effects of negative interest rate policy

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• dc.contributor.author Bottero, Margherita
• dc.contributor.author Minoiu, Camelia
• dc.contributor.author Peydró, José-Luis
• dc.contributor.author Polo, Andrea, 1983-
• dc.contributor.author Presbitero, Andrea F.
• dc.contributor.author Sette, Enrico
• dc.date.accessioned 2022-02-17T09:58:22Z
• dc.date.issued 2022
• dc.description Supplemental material file: online appendix
• dc.description.abstract We show that negative interest rate policy (NIRP) has expansionary effects on credit supply through a portfolio rebalancing channel. By shifting down and flattening the yield curve, NIRP differs from rate cuts just above the zero-lower-bound and has effects similar to QE. For identification, we exploit ECB’s NIRP and the Italian credit register and, for external validity, European and U.S. datasets. NIRP affects more banks with higher ex-ante liquid assets, including net interbank positions. More exposed banks reduce liquid assets, expand credit supply, especially to financially-constrained firms, and cut loan rates, inducing firms to increase investment and the wage bill.
• dc.description.sponsorship This project received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (grant agreement No 648398). Peydró also acknowledges financial support from the ECO2015-68182-P (MINECO/FEDER, UE) grant and the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563).
• dc.format.mimetype application/pdf
• dc.identifier.citation Bottero M, Minoiu C, Peydró JL, Polo A, Presbitero AF, Sette E. Expansionary yet different: credit supply and real effects of negative interest rate policy. Journal of Financial Economics. 2022 Nov;146(2):754-78. DOI: 10.1016/j.jfineco.2021.11.004
• dc.identifier.doi http://dx.doi.org/10.1016/j.jfineco.2021.11.004
• dc.identifier.issn 0304-405X
• dc.identifier.uri http://hdl.handle.net/10230/52516
• dc.language.iso eng
• dc.publisher Elsevier
• dc.relation.ispartof Journal of Financial Economics. 2022 Nov;146(2):754-78
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/648398
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/ECO2015-68182-P
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/SEV-2015-0563
• dc.rights © Elsevier http://dx.doi.org/10.1016/j.jfineco.2021.11.004
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.subject.keyword Negative nominal interest rates
• dc.subject.keyword Firm-level real effects
• dc.subject.keyword Portfolio rebalancing
• dc.subject.keyword Liquidity management
• dc.subject.keyword Monetary policy
• dc.title Expansionary yet different: credit supply and real effects of negative interest rate policy
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/acceptedVersion