Bottero, MargheritaMinoiu, CameliaPeydró, José-LuisPolo, Andrea, 1983-Presbitero, Andrea F.Sette, Enrico2022-02-172022Bottero 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.2021.11.0040304-405Xhttp://hdl.handle.net/10230/52516Supplemental material file: online appendixWe 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.application/pdfeng© Elsevier http://dx.doi.org/10.1016/j.jfineco.2021.11.004info:eu-repo/semantics/articlehttp://dx.doi.org/10.1016/j.jfineco.2021.11.004Negative nominal interest ratesFirm-level real effectsPortfolio rebalancingLiquidity managementMonetary policyinfo:eu-repo/semantics/openAccess