Abstract: Because of the difference of macro environment, bank structure, and the mechanism of interest rates in European countries, the influence on the bank risk behavior and heterogeneity will be different. In the context of long-term low interest rates with quantitative easing monetary policy implementation effect is gradually reduced, some European countries try to implement negative interest rate policy in the central bank′s reserve deposits. The paper uses European banking data to analyze the effects of negative interest rates, bank microscopic characteristics on bank risk behaviors. Results showed that negative interest rate policy in the euro zone have increased the risk of bank, and significantly reduce the Swiss bank′s risk level;considering the microscopic characteristics of banks, large banks, with negative interest rates can reduce the risk level of banks in Sweden, banks with high capital adequacy ratio, low level of liquidity, negative interest rates can reduce the risk level in the euro zone, under the low capital adequacy ratio, high level of liquidity circumstances, negative interest rates can reduce the risk level of banks in Denmark. The above conclusions confirm the effectiveness of negative interest rate policy, but there may be differences in the implementation of negative interest rate in different countries, so it is very important to strengthen liquidity regulation.

Key words: negative interest rate, risk behaviors, bank heterogeneity, liquidity regulation