The new normal: bank lending and negative interest rates in Austria

Arbeitspapier

Evidence on the effects of negative interest rates on bank lending is inconclusive so far. By applying a difference-in-difference 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 firms and households. Banks lend more often to indebted customers and to clients with higher probabilities of default, confirming the previous found increased risk-taking behavior in negative interest rate environment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 242

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; Money Supply; Credit; Money Multipliers ; Monetary Policy ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Monetary policy transmission ; negative interest rate policy ; portfolio rebalancing channel ; bank lending ; nancial stability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Barmeier, Marcel
• Event: Veröffentlichung
• (who): Oesterreichische Nationalbank (OeNB)
• (where): Vienna
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/264834
• Last update: 10.03.2025, 11:43 AM CET