Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201715
Authors: 
Buchholz, Manuel
Schmidt, Kirsten
Tonzer, Lena
Year of Publication: 
2019
Series/Report no.: 
Bundesbank Discussion Paper 27/2019
Abstract: 
This paper investigates how declines in the deposit facility rate set by the ECB affect euro area banks' incentives to hold reserves at the central bank. We find that, in the face of lower deposit rates, banks with a more interest-sensitive business model are more likely to reduce reserve holdings and allocate freed-up liquidity to loans. The result is driven by wellcapitalized banks in the non-GIIPS countries of the euro area. This reveals that conventional monetary policy instruments have limited effects in restoring monetary policy transmission during times of crisis.
Subjects: 
bank portfolio
central bank reserves
monetary policy
JEL: 
E52
G11
G21
ISBN: 
978-3-95729-608-5
Document Type: 
Working Paper
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