Depositors during the 2010s were more interest rate-sensitive and banks had to spend more to keep them once monetary policy had changed, a new paper argues.

In their working paper, published on November 9 in the US National Bureau of Economic Research, Philip Strahan and Tuo Yang find that when policy was at the zero lower bound and quantitative easing was active, banks paid depositors almost the same as each other and as money market funds.

As a consequence, the authors say depositors who usually