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The new normal: bank lending and negative interest rates in Austria (Marcel Barmeier)

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  • Marcel Barmeier

    (Oesterreichische Nationalbank)

Abstract

Evidence on the e ects of negative interest rates on bank lending is inconclusive so far. By applying a di erence-in-di erence estimation using granular loan level data with a large coverage from Austria, I show, contrary to some previous ndings, that the introduction of a negative deposit facility rate by the European Central Bank led to an increased credit supply by high-deposit nanced banks. Given the importance of relationship banking, the extended credit is granted mainly by smaller banks and via existing credit relationships to rms and households. Banks lend more often to indebted customers and to clients with higher probabilities of default, con rming the previous found increased risk-taking behavior in negative interest rate environment.

Suggested Citation

  • Marcel Barmeier, 2022. "The new normal: bank lending and negative interest rates in Austria (Marcel Barmeier)," Working Papers 242, Oesterreichische Nationalbank (Austrian Central Bank).
    • Handle: RePEc:onb:oenbwp:242
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    References listed on IDEAS

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    More about this item

    Keywords

    Monetary policy transmission; negative interest rate policy; portfolio rebalancing channel; bank lending; nancial stability;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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