Ever since the big recession of the world economy 2007, the central banks in Europe have struggled to regain financial stability. Their goals have been hard to reach and 2014 The European Central bank (ECB) introduced negative interest rates for the first time in the world history. However, today, year 2016, many countries still have not been able to reach their inflation target. During this time with expansive monetary policies, many European Union (EU) members have faced rising level of household debts to GDP. This study focus on EU-members and uses a Vector Autoregressive method, Granger causality test and an impulse-response test to give a greater understanding about the association between the level of household debt and interest rate. Further, it aims to investigate if the negative interest rate has an impact on that association. However, our empirical results show that there is a significant negative association between the level of household debt and the interest rate in Austria, Belgium, Bulgaria, Finland, Germany, Italy, Poland, Romania, Slovakia, Spain and Sweden. Further, they show that there is a granger causality from the interest rate to the level of household debt for Belgium, Finland, Germany, Poland, Slovakia and Sweden. For all these countries, our findings show that a shock in the interest rate have a short-term effect on the level of household debt. Lastly, we found no statistical significant evidence for that the negative association between the interest rate and the level of household debt does increase when the interest rate is negative.

Sweden’s central bank implemented a negative interest rate policy (NIRP) in 2015, one year after adopting a zero-interest rate policy. Due to the monetary policy’s untested framework,experts are divided on the effectiveness of such a policy as well as its fortitude when faced with an economic recession. The lack of research on how the interest rate affects various economic metrics has left ample room for analysis and discussion on the subject. The aim ofthis thesis is to analyze how Sweden’s monetary policy has affected the flow of foreign directinvestments (FDI). Specifically, the paper will be focused on discovering the effect of theRiksbank’s negative repo rate policy on net FDI inflows between 2006 and 2017. Our quantitative analysis found no significant relationship between Sweden’s repo rate and itsFDI inflows. However, significance was found in the variables exchange rate, research and development expenditures, corporate taxes, and wages.

When the Riksbank took the historic decision to cut the repo rate below zero, forecast at the same time was that it would be back on positive ground by the end of 2016. Now that the repo rate is adjusted down further Riksbank predicts that interest rates will remain negative until at least the turn of the year 2017-2018. The phenomenon of "negative interest rate" has thus become more than just the short paranthesis as it was initially meant to be. The purpose of this paper is therefore to examine how the low interest rates in general, and the negative interest rate in particular, affects the real estate market and its participants. Furthermore, it is investigated whether some participants relate to the negative interest rate differently than others, and if their expectations of the interest rate and the market's future development are different. The negative interest rate is a highly topical and new phenomenon and this kind of study has not been done before. The work is mainly built on qualitative interviews founded on a phenomenographical research approach, which aims to, based on an expert but heterogeneous respondent group, try to draw general conclusions on the basis of the answers received. Representatives from real estate funds, listed real estate companies, institutional real estate company, KTH, a real estate consultant and a bank were interviewed, in order to highlight the phenomenon from as many perspectives as possible. Quantitative surveys are also used to enhance reliability of the essay and its internal validity. The obtained empirical data shows that the only direct effect that the negative interest rates has is that the companies using leverage get a "mismatch" when they tie their interest rates with interest rate swaps- This is due to the STIBOR-floor that banks have put in place, which basically means they get higher interest costs, the more negative the interest rate is. Further, listed property companies are considered to be the investor category that has benefited most from low interest rate environment, this because of their relatively high leverage ratios, but also as they have effectively been able to use the capital market as an alternative source of funding. The low interest rates have meant that property values have risen rapidly, but all increases are not considered as justified. As for the respondents’ approach towards the market, it can be stated that the listed real estate companies have begun to position themselves for a possible touchdown on the market while the unleveraged institutional investors, continued to seek higher real estate exposure. In terms of the respondents’ future expectation about interest rate developments, it is clear from the response that the majority expect that low interest rates may be for a while but should then return to more normal levels, while the other two believed that the low interest rates instead may become the new normal. / När Riksbanken tog det historiska beslutet att sänka reporäntan under nollstrecket prognostiserades samtidigt att densamma skulle vara tillbaka på positiv mark redan i slutet av 2016. När nu reporäntan justerats ner ytterligare spår Riksbanken att räntan kommer att vara fortsatt negativ minst fram till årsskiftet 2017-2018. Fenomenet "minusränta" har således blivit mer än bara den korta parentes som det initialt var tänkt att vara. Uppsatsens syfte är följaktligen att undersöka på vilket sätt de låga räntorna i allmänhet, och den negativa räntan i synnerhet, inverkar på fastighetsmarknaden och dess aktörer. Vidare utreds huruvida vissa aktörer upplever/förhåller sig till den negativa räntan på annorlunda sätt än andra, samt ifall deras förväntingar om räntans och marknadens framtida utveckling skiljer sig åt. Minusräntan är ett högst aktuellt och nytt fenomen och denna typ av studie som belyser dess konsekvenser på fastighetsmarknaden har inte gjorts tidigare. Arbetet bygger främst på kvalitativa intervjuer baserade på en fenomenografisk forskningsansats, vilken syftar till att, utifrån en sakkunnig men heterogen respondentgrupp, försöka dra generella slutsatser med utgångspunkt i de mottagna svaren. Representanter från fastighetsfonder, börsnoterade fastighetsbolag, institutionellt ägda fastighetsföretag, KTH, en fastighetskonsult och en bank intervjuades för att belysa fenomenet ur så många perspektiv som möjligt. Kvantitativa enkäter används vidare för att stärka uppsatsens reliabilitet och dess inre validitet. Den erhållna empirin visar att den enda direkta effekten som just minusräntan har är att de belånade fastighetsaktörerna får en "missmatch" när de binder sina räntor med ränteswappar. Detta på grund av det STIBOR-golv som bankerna har infört, vilket i princip innebär att de får högre räntekostnader ju mer negativ räntan är. Vidare anses börsnoterade fastighetsbolag vara den investerarkategori som har gynnats mest av lågräntemiljön, detta delvis tack vare deras relativt höga belåningsgrader, men även då de effektivt har kunnat utnyttja kapitalmarknaden som alternativ finansieringskälla. De låga räntorna har inneburit att fastighetsvärdena snabbt har stigit, men alla höjningar anses inte vara lika befogade. Vad gäller aktörernas ställningstagande gentemot marknaden kan det fastläggas att de börsnoterade fastighetsbolagen har börjat positionera sig inför en eventuell sättning på marknaden medan de obelånade institutionella investerarna å sin sida fortsatt söker ökad fastighetsexponering. I fråga om respondenternas framtida förväntingar om räntans utveckling framgår av gensvaret att majoriteten förväntar sig att de låga räntorna kan bestå ett tag till för att sedan återgå till mer historiskt normala nivåer, medan de övriga två tror att de låga räntorna istället kan komma att bli det nya normala.

This thesis is focused on the comparison of methods of financing budget deficits and national debt management in the Czech Republic with other OECD countries in the context of the current situation on the global financial market. The first part describes the methods of financing budget deficits in the Czech Republic which are compared with selected OECD countries. The second part is aimed at the impact of foreign exchange interventions of the Czech National Bank on the domestic bond market and it is compared with negative interest rates policy. The last part analyses the impact of the Public Sector Purchase Programme on the Czech Republic's bond market. The thesis implies that besides other factors, foreign exchange intervention of the Czech National Bank have an impact on the current situation on the bond market. While the impact of the programme PSPP has not yet proved.

This thesis covers detailed analysis of bond pricing function. It focuses on connections between mathematical definitions and financial practice and it points out advantages and drawbacks of currently used function. Well known properties of this function are extended to negative internal rate of return values. This topic is further discussed with internal rate of return polynomial equations solving. Taylor series approximation is also shown regarding duration and convexity of bonds.