25 Years IWH

Kirsten Schmidt

Kirsten Schmidt
Current Position

since 1/16

Economist in the Department of Financial Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

Research Interests

  • banking regulation
  • monetary policy
  • financial stability

Kirsten Schmidt joined the Department of Financial Markets and its Research Group ”Regulation of International Financial Markets and International Banking” in January 2016.

Between 2010 and 2013, she completed the Bachelor of Science program Economics and Business Administration at the Eberhard Karls University Tübingen and the University of Michigan, Ann Arbor. From 2013 to 2015, she studied Economics and Finance (MSc) also in Tübingen.

Your contact

Kirsten Schmidt
Kirsten Schmidt
Mitglied - Department Financial Markets
Send Message +49 345 7753-723


Working Papers


Do Conventional Monetary Policy Instruments Matter in Unconventional Times?

Manuel Buchholz Kirsten Schmidt Lena Tonzer

in: IWH Discussion Papers , No. 12, 2017


This paper investigates how declines in the deposit facility rate set by the European Central Bank (ECB) affect bank behavior. The ECB aims to reduce banks’ incentives to hold reserves at the central bank and thus to encourage loan supply. However, given depressed margins in a low interest environment, banks might reallocate their liquidity toward more profitable liquid assets other than traditional loans. Our analysis is based on a sample of euro area banks for the period from 2009 to 2014. Three key findings arise. First, banks reduce their reserve holdings following declines in the deposit facility rate. Second, this effect is heterogeneous across banks depending on their business model. Banks with a more interest-sensitive business model are more responsive to changes in the deposit facility rate. Third, there is evidence of a reallocation of liquidity toward loans but not toward other liquid assets. This result is most pronounced for non-GIIPS countries of the euro area.

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