The Impact of the ECB’s Low Interest Rate Policy on Companies – Results of a special question featured in the ifo Business Survey on negative interest on deposits

As part of the ifo business survey in June, companies were surveyed on their experiences with negative interest rates. Evaluations of the special question show that one in five companies was confronted with negative interest rates on its deposits. Medium-sized and large companies were far more frequently affected than small companies. Most firms tried to avoid negative interest rates. The most common reactions in such cases are negotiating with the bank or switching to another bank that is not yet charging negative interest. Transfers between financial investments or corporate areas, as well as higher investment activity, were also frequently cited responses. The latter reaction is particularly interesting from an economic perspective, since it not only has a monetary impact, but also has implications for the real economy.