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Incentives for the finance sector: How the ECB affects banks' business assembling

Author

Listed:
  • Bernard Michael Gilroy

    (Paderborn University)

  • Alexander Golderbein

    (Paderborn University)

  • Christian Peitz

    (Paderborn University)

  • Nico Stöckmann

    (Paderborn University)

Abstract

Central banks implement negative interest rate policies (NIRP) to incentivize economic subjects to spend and invest money for long term economic growth. Although nominal negative interest rates can not be effectively explained by economic theory, when inflation is included there are currently real negative interest rates in almost all industrial nations. We investigate the difference in banks' performances regarding their core business composition in the short run after zero interest rate policy is announced first. Assigning European banks in the interval from a pure commercial bank to an investment bank leads to the observed heterogeneity within the industry.

Suggested Citation

  • Bernard Michael Gilroy & Alexander Golderbein & Christian Peitz & Nico Stöckmann, 2018. "Incentives for the finance sector: How the ECB affects banks' business assembling," Working Papers CIE 116, Paderborn University, CIE Center for International Economics.
    • Handle: RePEc:pdn:ciepap:116
    as

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    File URL: http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/ciepap/WP116.pdf
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    References listed on IDEAS

    as
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    5. Burriel, Pablo & Galesi, Alessandro, 2018. "Uncovering the heterogeneous effects of ECB unconventional monetary policies across euro area countries," European Economic Review, Elsevier, vol. 101(C), pages 210-229.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Monetary Policy; Bank Profitability; Globalisation; Financial Crisis;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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