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Monetary Policy Transmission Through Cross-Selling Banks

Author

Listed:
  • Christoph Basten

    (University of Zurich; Swiss Finance Institute; CESifo (Center for Economic Studies and Ifo Institute))

  • Ragnar Juelsrud

    (Norges Bank)

Abstract

We show theoretically and empirically how banks' opportunities to crosssell their depositors loans later affect monetary policy transmission. Expected later lending profits motivate banks to set lower deposit spreads to onboard and retain depositors, more the lower policy rates and the greater a bank's cross-selling opportunities. With data on every Norwegian bank household relationship, we exploit that loan cross-sales vary with demographics and so across municipalities. Comparing bank-municipality cells within each bank-year to control for refinancing needs, we find that banks with more cross-selling potential cut deposit spreads more following policy rate cuts and exhibit higher deposit and loan growth.

Suggested Citation

  • Christoph Basten & Ragnar Juelsrud, 2024. "Monetary Policy Transmission Through Cross-Selling Banks," Swiss Finance Institute Research Paper Series 24-36, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2436
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4886084
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    More about this item

    Keywords

    deposit pricing; deposit spread; deposit channel of monetary policy; cross-selling; multi-product banking; multi-period banking; loan spread;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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