Monetary policy transmission to mortgages in a negative interest rate environment

Arbeitspapier

Do negative policy rates hinder banks' transmission of monetary policy? To answer this question, we examine the behaviour of Italian mortgage lenders using a novel loan-level dataset. When policy rates turn negative, banks with higher ratios of retail overnight deposits to total assets charge more on new fixed rate mortgages. This suggests that the funding structure of banks may matter for the transmission of negative policy rates, especially for long-maturity illiquid assets. Nevertheless, the aggregate economic implications for households are small, suggesting that concerns about inefficient monetary policy transmission to households under modestly negative rates are likely overstated.

Object Details

• ISBN: 978-92-899-3505-0
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2243

Classification and Topics

• Classification: Wirtschaft ; Money and Interest Rates: General ; Monetary Policy ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: monetary policy ; negative interest rates ; bank lending ; mortgages ECB

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Amzallag, Adrien ; Calza, Alessandro ; Georgarakos, Dimitris ; Sousa, João
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2019

Further information

• DOI: doi:10.2866/91987
• Handle: http://hdl.handle.net/10419/208277
• Last update: 10.03.2025, 11:46 AM CET