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Negative monetary policy rates and systemic banks’ risk-taking
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Negative monetary policy rates and systemic banks’ risk-taking

Evidence from the euro area securities register

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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.
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ISSN 1725-2806
ISBN 978-92-899-4041-2
DOI 10.2866/310634
Catalogue number QB-AR-20-050-EN-N
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ISSN 1725-2806 ISBN 978-92-899-4041-2 DOI 10.2866/310634 Catalogue number QB-AR-20-050-EN-N
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