Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100031
Authors: 
Bucher, Monika
Hauck, Achim
Neyer, Ulrike
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 134 [rev.]
Abstract: 
This paper shows that depending on the distribution of banks' uncertain liquidity needs and on how monetary policy is implemented, frictions in the interbank market may reinforce the effectiveness of monetary policy. These frictions imply that with its lending and deposit facilities the central bank has an additional effective instrument at hand to impose an impact on bank loan supply. While lowering the rate on the lending facility has, taken for itself, an expansionary effect, lowering the rate on the deposit facility has a contractionary effect. This result has interesting implications for monetary policy implementation at the zero lower bound.
Subjects: 
interbank market
monetary policy
monetary policy implementation
zero lower bound
loan supply
JEL: 
E52
E58
G21
ISBN: 
978-3-86304-133-5
Document Type: 
Working Paper

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