Willingness of bank money creation

The propensity of banks to grant loans to their customers. This depends essentially on – the spread between credit interest (interest rate which the bank has to pay to the depositor) and borrowing rate (interest which the bank receives for loans) as well as – the interest rate level overall and – the refinancing policy of the central bank. – Low interest rates reduce CETERIS PARIBUS the banks’ interest in granting loans to their customers. – See tying function, reserve requirement, low interest rate policy, interest rate calculation, interest rate differential. – Cf. ECB Monthly Bulletin, October 2011, p. 67 ff. (dependence also on macroeconomic developments).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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