Garyn Tan

How do banks operate in a negative policy rate environment? Bank profitability is threatened by policy rate cuts in negative territory because the zero lower bound on retail deposit rates prevents banks from benefiting from cheaper deposit funding costs. Contrary to some earlier research, this paper finds that banks most affected by negative rates through this retail deposits channel increase their lending relative to less affected banks. The response is limited to mortgage lending, and is driven by banks with high household deposit ratios and banks with high overnight deposit ratios. Overall, net interest margins are unaffected, which implies that the volume effect is large enough to offset the adverse impact on bank profitability. However, the positive effect on lending dissipates as negative rates persist. This suggests that although the "reversal rate" has not been breached, it may creep up over time as banks become more limited in their options to maintain profit margins. The results also point to an important role for bank capitalisation—net interest margins of relatively highly capitalised banks are squeezed, whereas the net interest margins of less capitalised banks are unaffected. This can be explained by differences in capacity for shock absorbency.

Using a decomposition of US monetary policy shocks and inflation forecasts from Consensus Economics, we find that information and monetary policy shocks move inflation expectations in opposite directions. Better performing forecasters appear less reliant on the informational content of announcements.

Open defecation (OD) is still a significant public health challenge worldwide. In Timor-Leste, where an estimated 20% of the population practiced OD in 2017, increasing access and use of improved sanitation facilities is a government priority. Community-led total sanitation (CLTS) has become a popular strategy to end OD since its inception in 2000, but evidence on the uptake of CLTS and related interventions and the long-term sustainability of OD-free (ODF) communities is limited. This study utilized a mixed-methods approach, encompassing quantitative monitoring and evaluation data from water, sanitation, and hygiene (WASH) agencies, and semi-structured interviews with staff working for these organizations and the government Department of Environmental Health, to examine sanitation interventions in Timor-Leste. Recommendations from WASH practitioners on how sanitation strategies can be optimized to ensure ODF sustainability are presented. Whilst uptake of interventions is generally good in Timor-Leste, lack of consistent monitoring and evaluation following intervention delivery may contribute to the observed slippage back to OD practices. Stakeholder views suggest that long-term support and monitoring after ODF certification are needed to sustain ODF communities.

We study how experiences of mental health conditions in youth affect economic and health outcomes in early adulthood. Using administrative data on psychiatric diagnoses to identify children with depression, we examine how the approval of the first drug indicated to treat childhood depression altered outcomes as adults. We document a large earnings penalty of childhood depression, but find no significant evidence that greater access to antidepressants in childhood helped close the earnings gap. We do find significant effects on health: affected cohorts are less likely to be taking short-term treatments like benzodiazipines, have more overall interaction with the psychiatric healthcare system, and have fewer visits to the ER. We provide evidence that these effects are unlikely to be driven by compositional changes in socioeconomic status or depression severity of the childhood depression group.