Can negative interest rates really stimulate credit?

Interest rate credit financing income

caixinwang· 2016-06-19 12:55:41

[Caixin] (columnist, freelance writer Xia Tianran Bell) the end of January this year, Japan launched a negative interest rate policy, negative interest rates have attracted extensive attention. In the case of quantitative easing effect continues to weaken, the Bank of Japan, the central bank to adopt a negative interest rate policy is a step in the risk of strokes. Results from the implementation point of view, the negative interest rates did not pull the downturn has been a long time of inflation, the yen and even the way up to 105 of the level of appreciation. However, we can see from the April meeting of the Bank of Japan meeting minutes, most of the Japanese bank members believe that the effect of negative interest rates are being shown, the attitude of the negative interest rates are also positive. In view of Japan's inflation and exchange rates are "poor", why do these officials still support negative interest rates? What are the effects of what they are saying?

we believe that the impact of negative interest rate policy on credit in different countries is relatively large. Negative interest rates do play a role in credit expansion, only in the euro area. But we can not overestimate the negative rate of credit, which may also be mixed with the directional long-term refinancing operations (TLTRO) and other policies. But the only "bright spot" may be the reason why the Bank of Japan's official support continues to use negative interest rates.

, however, to stimulate credit expansion is one thing, credit flows is another matter. The loose monetary stimulus, a slowdown in loan demand in the euro area enterprises, real estate loan demand is accelerating, this phenomenon is particularly alarming, because the capital off the virtual reality may be a signal of monetary easing to limit. From the recent international policy community on fiscal expansion has repeatedly stressed that it can be seen that the money "innovation" may be moving to the limit (see our previous article "negative interest rate limit in what?" )

credit changes?

negative interest rate is the essence of the overall level of interest rates from low interest rates and zero interest rates continue to cut, to promote commercial credit delivery, so as to achieve monetary easing, stimulate economic growth. The Bank of Japan, the Committee suggested that it seems to be the improvement of credit. Japan's negative interest rate policy implementation has only 3 months time, the lack of data samples led us to examine its impact. However, the Bank of Japan to implement the negative interest rate policy is not the first, the European countries have been trying, we can learn from the experience of other countries.

the European Central Bank, the Bank of Switzerland, the central bank and the Central Bank of Sweden and the Swedish central bank in 2014 and early 2015 implementation of negative interest rates, the Bank of Japan is the beginning of January 2016 to implement. From the absolute amount of view, since June 2014, the euro zone's credit expansion significantly, Denmark, Sweden and Switzerland, the credit will remain stable or even a slight decline. Japan's credit expansion from the beginning of the end of 2015, the increase is quite obvious. From the relative amount of view, the euro area and Japan's credit expansion is not obvious. Credit accounted for the proportion of GDP to measure, the euro area credit accounted for almost no change in other countries, the proportion of credit in the end of 2014 there is a significant volatility, but the negative interest rates after the implementation of credit accounted for stable.

even without taking into account the relative amount of the smooth, the expansion of the euro area credit is not all negative interest rates credit. The European Central Bank in the implementation of negative interest rates at the same time, the implementation of other monetary easing, including the expansion of the size of the debt purchase, the purchase of debt and expand the scope of targeted long-term refinancing operations (TLTRO), the absolute amount of euro zone credit rose is also very likely affected by these factors. However, it is almost impossible to separate the effect of the negative interest rate from these monetary policy, so we can only try to analyze from the qualitative point of view.

bank how to see?

in the euro area bank credit investigation of the European Central Bank released the latest "(Euro Area Bank Lending Survey) report, the European Central Bank for the first time to join the investigation of the negative interest rate policy. The investigation directly examines the impact of negative interest rates on bank interest income, lending conditions, and the amount of credit.

in terms of bank profits, 81% (net ratio) of the bank said that the past 6 months, negative interest rates led to lower interest income, and the ratio will continue to expand in the future to about 85%.

in bank lending, loan interest rates have no unexpected adjustment, the loan interest rate floating space (margin loan) also narrowed. It is worth noting that the bank's non interest income has increased. Bank to business, purchase and consumer credit increased non interest expense ratio were 8%, 9% and 10%. This also reflects the bank's interest income was compressed after the development of other income trend.

in the amount of bank credit, the negative interest rate does raise the level of bank lending. But for different types of loan demand, there are differences in the magnitude of lending. 2% net proportion of the bank said it raised loans to the corporate sector, 11% of the bank said the increase in consumer loans to residents, 16% of the bank said the amount of loans to the residents to increase the purchase.


: euro zone bank credit investigation

note: the blue column represents the past 6 months, the Yellow column represents the expectations for the future; the vertical axis unit as a percentage, said rising and falling, and the proportion of the results is

to reflect the preference of bank lending, which is to purchase loans, loans for no great change in enterprise. Of course, this is also related to the differences in loan demand. "The euro zone bank credit" survey report shows that in driving the ECB continued loose monetary policy, bank lending conditions have been relaxed, the effective promotion of the enterprises and residents demand for loans. In the first quarter of 2016, 17% (net percentage) of banks reflected an increase in demand for corporate loans, but this was not worth optimism, as the proportion was 27% in the last quarter. In contrast, the proportion of the purchase loan demand rose from 29% to 32%, the proportion of consumer demand for loans rose from 16% to 21%. The rise in demand for housing loans was mainly affected by low interest rates and an increase in the demand for consumer loans as a result of the increase in consumer spending on durable goods.

what do we see?

data from the current point of view, the impact of negative interest rate policy on different national credit. Only from the euro area, the negative interest rate does play a role in credit expansion, but this may be mixed with the directional long-term refinancing operations (TLTRO) and other policies. This may also be a reason for the continued use of negative interest rate policy by the Bank of Japan official support.

however, the easing of monetary stimulus, the euro area business loan demand slowdown and real estate loans to accelerate the need to be vigilant, because the money off real to virtual may be a signal of monetary easing to the limit. From Abe Shinzo recently continued to advocate to increase fiscal stimulus can be seen, its monetary policy to weaken the marginal effect of concern. After all, the Japanese government certainly do not want to negative interest rates recreating another round of real estate bubble. Zhong Zhengsheng

- the wealth of new think-tank moneta macroeconomic research director, summer natural moneta research on Macro Analyst

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