We propose a dynamic theory of banking where deposits play the role of productive capital as in the classical Q-theory … of investment for non-financial firms. A key conceptual innovation of our theory is that the stock of deposits cannot be … perfectly controlled by the bank. Demand deposit accounts commit the bank to allow holders to withdraw or deposit funds at will …

deposits tends to be floored at zero, which limits the typical transmission of policy rate cuts to bank funding costs. We … risk taking by banks under NIRP and contrasts results that associate NIRP with a contraction in bank loans. Broader … holdings for the effectiveness of NIRP, pointing to a strong complementarity of NIRP with central bank liquidity injections, e …