Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247680 
Year of Publication: 
2021
Series/Report no.: 
Deutsche Bundesbank Discussion Paper No. 42/2021
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
We consider a standard banking model with agency frictions to simultaneously studythe weakening and reversal of monetary transmission and banks' risk-taking in alow-interest environment. Both, weaker monetary transmission and higher risk-taking arise because lower policy rates impair banks' net worth. The pass-throughto deposit rates, the level of excess reserves and the extent of the agency problembetween banks and depositors are crucial determinants of monetary transmission.If the deposit pass-through is sufficiently impaired, a reversal rate exists. For policyrates below the reversal rate further interest rate reductions lead to a disproportionalincrease in risk-taking and a contraction in loan supply.
Subjects: 
Monetary policy
Bank lending
Risk-taking channel
Reversal rate
JEL: 
G21
E44
E52
ISBN: 
978-3-95729-850-8
Document Type: 
Working Paper

Files in This Item:
File
Size
527.16 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.