THE NEGATIVE INTEREST RATE POLICY: THE EVENTUALITIES AND IMPLICATIONS
Journal Title: JOEEP: Journal of Emerging Economies and Policy - Year 2016, Vol 1, Issue 1
Abstract
In the awakening of 2008’s financial meltdown, the fiscal authorities have ambitiously plunged into new quests to figure out the distresses originated by traditionally the lowest interest rate of zero. Right after some plaintive sobering times, they have started implementing sophisticated quantitative easing policies such as adopting negative policy rate, and charging negative interest rates on the banks’ deposits hold in central bank accounts in order to prevent numerous undesired outcomes like a catastrophic liquidity crisis in Europe, a deterioration in alarming recession already become permanent in Japan, and menacingly overvaluation of some developed countries’ currencies. The point of our study is to scrutinize the underlying impacts of negative interest rate on the global sphere of banking and finance. Within the context of our study, the concept of negative interest rates is theoretically approached, and a wide range of diverse views dominant in academic literature is included. Across the research, conspicuous examples of countries embracing negative interest rate policies are attentively probed through elaborately analyzing the functioning of monetary transmission mechanisms, and the economic reflections of interest rate practices indigenized by central banks around the world. In the final chapter, the prospective consequences of negative interest rate policies are thoroughly quantized. The study is of vital importance for multifarious economic entities to intimately comprehend the negative interest rate policy.
Authors and Affiliations
Selman Yılmaz, Cansu ŞARKAYA İÇELLIOĞLU
Keywords
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