FIXED INCOME SECURITIES PROJECT PROPOSAL

Prof. Prasenjit Chakrabarti 4/11/2019

IMPACT OF NEGATIVE INTEREST RATES IN ECONOMIES

Problem statement:

1. Understanding the circumstances that led to the introduction of negative interest rates and
factors responsible for sustaining the economic growth.
2. Evaluate the impact of negative interest rates with comparison to macro-economic parameters.

Why is the topic relevant:

Negative interest rates give the impression of an economic slowdown or impending recession. More and
more central banks are deciding to introduce negative interest rates in order to stimulate economic
activity. It is believed to incentivize banks to lend money more freely and help businesses and individuals
to invest, lend and spend more money rather than maintaining it as savings deposits. Countries which
have negative interest rates are Japan, Sweden, ECB, Denmark and Switzerland.

The research will allow us to explore the reasons for banks to introduce negative rates in order to
sustain economy. Further, we try to analyze the impact of such rates on the economy by considering
factors like stock market performance, consumption pattern, government spending, value of deposits,
investment (manufacturing, industry, and services).

Data source:

World Bank website, Trading economics, Investing.com.

Methodology to be used:

Analysis in excel using statistical tools like correlation, trend analysis.

Expected results:

 Examining reasons behind introducing negative rates by banks.

 Understanding how negative rates are paired with other policy parameters for successful
implementation.
 Positive relationships between negative interest rates and macro-economic parameters in the
long-run.

GROUP 10
Ekta Sharma (M086-18) || Mansi Sharma (M097-18) || Naman Jain (M099-18) || Ridhima Maheshwari
(M106-18) || Rishabh Khandelwal (M107-18)