Do negative interest rates make banks less safe?

Federico Nucera, André Lucas*, Julia Schaumburg, Bernd Schwaab

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


We study the impact of increasingly negative central bank policy rates on banks’ propensity to become undercapitalized in a financial crisis (‘SRisk’). We find that the risk impact of negative rates depends on banks’ business models: Large banks with diversified income streams are perceived as less risky, while smaller and more traditional banks are perceived as more risky. Policy rate cuts below zero trigger different SRisk responses than an earlier cut to zero.

Original languageEnglish
Pages (from-to)112-115
Number of pages4
JournalEconomics Letters
Issue numberOctober
Publication statusPublished - 2017

Bibliographical note

Stored under number ds1120 in Archstore.


  • Bank business model
  • Negative interest rates
  • Systemic risk
  • Unconventional monetary policy measures


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