Economics, Econometrics and Finance
4 years ago

Interest rates impact bank lending: study reveals surprising results.

RePEc: Research Papers in Economics
Interest on Excess Reserves and U.S Commercial Bank Lending
Marcelo Rezende, Judit Temesváry, Rebecca Zarutskie

Paper Summary

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The article examines how changes in interest rates on excess reserves affect bank lending. The researchers looked at whether these changes influenced banks' reserve holdings and lending, considering the impact of monetary policy and economic conditions. They found that variations in the interest on excess reserves rate and the spread between this rate and the federal funds rate can impact banks' decisions on lending and reserves.