Negative interest rates and saving: an empirical analysis

With the interest rate levels decreasing to a lower level than ever before, research about the economic consequences of this becomes indispensable. In this thesis, I investigate the effect of the interest rate on the savings behaviour of consumers. I found that consumers mainly base their savings decisions on the nominal interest rate instead of the real interest rate. This collides with the standard economic assumption of rationality. Second, I found that it is possible to diminish the influence of the nominal interest rate on savings decisions by providing information about the importance, meaning and computation of real interest rates. Also, I found that consumers act loss averse in the case of a negative interest rate. Once the interest rate drops slightly below zero, consumers solidly decide to withdraw money from their bank accounts and keep it at home. An unfavourable situation, not only for the economy, but also regarding the huge personal financial risks attached to storing money at home.