The interest rate pass-through in the low interest rate environment: Evidence from Germany

Arbeitspapier

In this paper it is shown that the ECB's main refinance rate, measured by various Taylor-rules, is far too low for Germany for over half a decade. That entails risks for the stability of Germany's financial system. How strong these risks materialize depends on the extent to which German banks pass on the low policy rates to their customers. In this paper, the interest rate pass-through in Germany in the low interest era is investigated using error-correction models for various bank interest rates. The results indicate a stronger short-term pass-through as well as diminished interest rate margins that weigh on banks' profits. However, there is no evidence for structural changes in the long-term relationship between policy rates and banks' interest rates. While the latter might be soothing for monetary policy makers, the former is rather a reason for concern.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Thünen-Series of Applied Economic Theory - Working Paper ; No. 151

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Interest Rates: Determination, Term Structure, and Effects ; Central Banks and Their Policies
• Thema: low interest rates ; interest rate pass-through ; interest rate channel

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Hennecke, Peter
• Ereignis: Veröffentlichung
• (wer): Universität Rostock, Institut für Volkswirtschaftslehre
• (wo): Rostock
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/157232
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ