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- posive: NR on deposits could induce a portfolio shift into other financial assets bringing about higher asset prices --> wealth effect (I'd not rely on this)
- negative: they are akin to a tax on depositors income so
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In the second case, banks will charge customers for higher loan rates frustating the CB's attempt to stimulate investment via NR
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The idea behind NR is the classical loanable fund theory
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1) banks cannot lent out reserves
2) banks lend if
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Anyway, regardless of who would bear the cost of NR, firms will switch from equity finance to loan finance beacuse
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Not really cool
There would still be a lot to say, also about negative policy rate. But this thread would be too long
The end