For those who doubt that negative interest rates are bad for banks, take a look at what's going on in Japan.
The nation's commercial lenders are loading up on bonds that don't come due for decades to get some yield, any kind at all. They bought a net 197.4 billion yen (US$1.7 billion) of superlong Japanese government bonds in January, up from 7 billion yen the month before, according to a Bloomberg News article by Chikako Mogi and Shigeki Nozawa.
The banks are in a bind because bonds with maturities extending out a decade all carry negative yields as a result of the Bank of Japan's attempts to suppress borrowing costs, including its January announcement to charge interest on some bank reserves. So unless financial institutions want to own bonds that pay them nothing, they need to lend for much, much longer or take on more credit risk.
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