Inhomogeneous Financial Markets in a Low Interest Rate Environment—A Cluster Analysis of Eurozone Economies

In the present paper, we investigate financial homogeneity of euro area economies by contrasting eurozone countries’ responses to monetary policy steps theoretical assumptions liquidity trap phenomenon. Our assumption is that are not completely homogeneous. Hence, in a zero-interest rate environment, asset holding decisions economic agents exhibit detectable differences across countries. We verify our using Eurostat data. use stocks countries cluster concerned. Previous literature has examined changes ratio assets GDP, nor structural total stock under zero lower bound. The paper uses k-centers analysis based on Euclidean distance for detecting portfolio holdings actors owing crises and responses. results confirm markets fragmented. There significant different Eurozone countries, both during after crisis. Despite some similarities rearrangement ECB’s does have uniform impact markets, notable prevail structures