Bank lending policies and monetary policy: some lessons from the negative interest era

Abstract

The views expressed in this paper are those of the authors and do not necessarily coincide with those of the Banco de España and the Eurosystem. We would like to thank two anonymous referees, Ugo Albertazzi, Mario Alloza, Carlo Altavilla, Geert Bekaert, Roberto Blanco, Diana Bonfim, Nelson Camanho (discussant), Florian Heider (discussant), Ivan Ivanov (discussant), Enrique Moral Benito, Elis Naiborhu, Justine Pedrono (discussant), Ana del Rıo, Marıa Rodrıguez-Moreno, Massimo Rostagno, Farzad Saidi (discussant), Glenn Schepens (discussant), Moritz Schularick (editor), and João Sousa, as well as seminar/conference audiences at the Banco de España-Banque de France Workshop ‘Banks and Monetary Policy’, the 2020 Annual Meeting of the Central Bank Research Association (CEBRA), ECB 2021 Banking Analysis for Monetary Policy Taskforce Meeting, Fifth Research Workshop of the MPC Task Force on Banking Analysis for Monetary Policy (Brussels), IBEFA Summer Meeting (Vancouver), XXVI Finance Forum (Santander), 2018 C.R.E.D.I.T. Conference (Venice), Second Annual Workshop of the ESCB Research Cluster on Monetary Economics (Rome), Paris December Finance Meeting (Paris), the First annual BEAR conference: the monetary toolkit (Bank of England), the European Central Bank and Banco de España for many helpful comments. This paper was previously circulated with the titles: ‘Adapting lending policies when negative interest rates hit banks’ profits’ and ‘Adapting lending policies in a “negative-for-long” scenario’. The Managing Editor in charge of this paper was Moritz Schularick.