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Monetary policy transmission through cross-selling banks

Author

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  • Basten, Christoph
  • Juelsrud, Ragnar

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 Classification: D14, D43, E52, G21, G51

Suggested Citation

  • Basten, Christoph & Juelsrud, Ragnar, 2025. "Monetary policy transmission through cross-selling banks," Working Paper Series 3072, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20253072
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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