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The great Covid cash surge - digitalisation hasn't dented cash's safe haven role

Ashworth, Jonathan and Goodhart, C. A. E. (2021) The great Covid cash surge - digitalisation hasn't dented cash's safe haven role. CEPR discussion papers (DP16618). Centre for Economic Policy Research (CEPR), London, UK.

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Abstract

There is a debate about the effect of the extremely low, or even negative, interest rate regime on bank profitability. On the one hand it raises demand and thereby adds to bank profits, while on the other hand it lowers net interest margins, especially at the Zero Lower Bound. In this paper we review whether the prior paper by Altavilla, Boucinha and Peydro (2018) on this question for the Eurozone can be generalized to other monetary blocs, i.e. USA and UK. While our findings have some similarity with their earlier work, we are more concerned about the possible negative effects of this regime, not only on bank profitability but also on bank credit extension more widely.

Item Type: Monograph (Discussion Paper)
Official URL: https://cepr.org/content/discussion-papers
Additional Information: © 2021 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HG Finance
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E49 - Other
N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N10 - General, International, or Comparative
N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
Date Deposited: 14 Oct 2021 10:15
Last Modified: 14 Oct 2021 10:15
URI: http://eprints.lse.ac.uk/id/eprint/112432

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