Mixing QE and Interest Rate Policies at the Effective Lower Bound: Micro Evidence from the Euro Area

In the presence of negative monetary-policy rates and a zero lower bound on deposit rates, banks that are more exposed to central banks’ asset-purchase programs reduce their lending real economy by than counterparts. When face customer an asset swap between securities reserves reduces net worth as cost holding cannot be matched with reduction in funding. Exploiting euro-area syndicated data German credit registry, we provide evidence deposit-reliant relatively higher funding costs greater exposure large-scale purchases corporate more, have stock returns, rebalance interbank from safe risky countries.