TY - UNPB
T1 - Euro Area Banks’ Market Power, Lending Channel and Stability: The Effects of Negative Policy Rates
AU - Altunbas, Yener
AU - Avignone, Giuseppe
AU - Kok, Christoffer
AU - Pancaro, Cosimo
N1 - All rights reserved. Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the ECB or the authors.
PY - 2023/2/1
Y1 - 2023/2/1
N2 - This paper investigates to what extent the introduction of negative monetary policy rates altered the competitive behaviour in the euro area banking sector. Specifically, it analyses the effect that negative policy rates had on euro area banks’ market power in comparison to banks that have not been subject to negative rates. The analysis, considering a sample of 4,223 banks over the period 2011–2018 and relying on a difference-in-differences methodology, finds that negative monetary policy rates led to an increase in euro area banks’ market power. Furthermore, it shows that, during the negative interest rate policy period, change in banks’ competitive behaviour affected the bank lending channel and discouraged banks
from taking excessive risks.
AB - This paper investigates to what extent the introduction of negative monetary policy rates altered the competitive behaviour in the euro area banking sector. Specifically, it analyses the effect that negative policy rates had on euro area banks’ market power in comparison to banks that have not been subject to negative rates. The analysis, considering a sample of 4,223 banks over the period 2011–2018 and relying on a difference-in-differences methodology, finds that negative monetary policy rates led to an increase in euro area banks’ market power. Furthermore, it shows that, during the negative interest rate policy period, change in banks’ competitive behaviour affected the bank lending channel and discouraged banks
from taking excessive risks.
UR - https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2790~9e2844fdb8.en.pdf?4fa7b3c0d584bfcc72987910fdd996d4
U2 - 10.2139/ssrn.4368836
DO - 10.2139/ssrn.4368836
M3 - Working paper
T3 - Working Paper Series
BT - Euro Area Banks’ Market Power, Lending Channel and Stability: The Effects of Negative Policy Rates
PB - European Central Bank
ER -