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We study the impact of increasingly negative central bank policy rates on banks' propensity to become undercapitalized …
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European bank equity values - an effect that is normally positive - has become negative since interest rates in the euro area …
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Negative monetary policy rates are associated with a particular friction because the remuneration of retail deposits tends to be floored at zero. We investigate whether this friction affects banks’ reactions when the policy rate is lowered to negative levels, compared to a standard rate cut in...
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