The European Central Bank’s negative interest rate policy increased Italian banks’ credit supply to smaller and riskier firms, a working paper published by the Bank of Italy finds.

In Expansionary yet different: credit supply and real effects of negative interest rate policy, Margherita Bottero et al investigate how this form of policy works using data from Italy.

The authors argue that negative interest rate policy differs in how it works from a policy of cuts to interest rates that are low