Impact of a Low Interest Rate Environment – Global Liquidity Spillovers and the Search-for-Yield

Abstract

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Financial integration, global liquidity and global macroeconomic linkages

“…Furthermore, cross-border financial transactions could also be driven by global monetary conditions. In a low interest rate environment caused by expansionary monetary policy which results in large global liquidity, financial resources could be shifted around internationally in a search for yield (Belke, 2013).…”

Beyond venture capital: an exploratory study of the finance-innovation-policy nexus in cleantech

“…Although the share of cleantech Venture Capital (VC) deals as a percentage of all deals rose from 1% to 10% between 1996 and 2010 (Cumming et al, 2016), investments into key enabling technologies (cleantech, 1 nanotech, and biotech) have only recently seen a slight recovery (McCrone, 2015). This, even in the context of recent changes in monetary policy leading to low interest rates and heavy injections of liquidity into financial markets (Belke, 2013). This low cleantech investment environment follows the financial crisis of 2008 and has been particularly prevalent in early-stage VC where financing has almost disappeared (see Figure 1).…”

From “Usury” to “Financial Alchemy:” Martin Luther’s Economic Writings Revisited

“…This might be useful to warn investors and other financial institutions against taking a certain level of interest rates for granted (Nassr, Wehinger and Mamika 2015). Recent history has clarified that financial products based on guaranteed returns, like many life insurance contacts, can cause severe problems and even threaten financial stability (Belke 2013;Kablau and Weiß 2014). Thus, the old proposition of the "sterility of money" can still be useful to remind investors that, in a market economy, there is no guarantee to receive a certain return on investment.…”