Do negative interest rates affect bank risk-taking?

We offer early evidence on the impact of negative interest rate policy (NIRP) banks’ risk-taking. Our primary result shows banks in NIRP-adopter countries reduce holdings risky assets by around 10 percentage points following implementation NIRP comparison to non-adopter countries. augment this identifying NIRP’s other aspects risk-taking behaviour; is associated with reductions loan growth and average price (by 3.7 59 basis points) a rebalancing asset portfolios towards safer assets. Secondly, we find NIRP-effect heterogeneous; post-NIRP increases at strongly capitalised operating less competitive markets that exploit market power insulate net margins profitability. robust empirical supports “de-leverage” hypothesis which suggests acquire safer, liquid bolster their capital positions rather than searching for value acquiring riskier base our sample 2,584 from 33 OECD across 2012 2016, models employ difference-in-differences framework. • Negative per se does not increase bank In adopting constrain preferring The effect heterogeneous. Better post NIRP. Banks