Negative interest rates and bank credit risk-taking
Date
2026
Authors
Dai, Z.
Xu, L.
Krishnamurti, C.
Lu, Z.
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Journal article
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Australian Journal of Management, 2026; 1-29
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Zixuan Dai, Lei Xu, Chandra Krishnamurti, Zenghua Lu
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Abstract
We examine the impact of the negative interest rate policy (NIRP) on bank credit risk-taking. Employing a triple difference (TD) methodology and a dataset of 1958 banks from 29 member countries of the Organisation for Economic Cooperation and Development (OECD) over 2011–2017, we find that banks in countries adopting NIRP exhibit a contraction in loan loss provisioning. Moreover, this NIRP effect depends on country- and bank-specific characteristics such as inflation, bank size, and bank specialisation. We also employ other methods, such as the quadruple difference (QD) model and propensity score matching (PSM), to check the robustness of our findings from the TD model. JEL Classification: E43, G21, G28
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© The Author(s) 2026