Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216806
Authors: 
Bubeck, Johannes
Maddaloni, Angela
Peydró, José-Luis
Year of Publication: 
2020
Abstract: 
We show that negative monetary policy rates induce systemic banks to reach-for-yield. For identification, we exploit the introduction of negative deposit rates by the European Central Bank in June 2014 and a novel securities register for the 26 largest euro area banking groups. Banks with more customer deposits are negatively affected by negative rates, as they do not pass negative rates to retail customers, in turn investing more in securities, especially in those yielding higher returns. Effects are stronger for less capitalized banks, private sector (financial and non-financial) securities and dollar-denominated securities. Affected banks also take higher risk in loans.
Subjects: 
negative rates
non-standard monetary policy
reach-for-yield
securities
banks
JEL: 
E43
E52
E58
G01
G21
Document Type: 
Working Paper

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