Bank intermediation activity in a low interest rate environment

Michael Brei and Claudio Borio

No 807, BIS Working Papers from Bank for International Settlements

Abstract: This paper investigates how the prolonged period of low interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced economies during the period 1994–2015. We find that low interest rates induce banks to shift their activities from interest-generating to fee-related and trading activities. This rebalancing is stronger for low capitalised banks. Banks also moderately adjust their funding structure, away from short-term market funding towards deposits. We observe a concomitant decline in the risk-weighted asset ratio and a reduction in loan-loss provisions, which is consistent with signs of evergreening.

Keywords: monetary policy; bank business models; financial crisis (search for similar items in EconPapers)
JEL-codes: C53 E43 E52 G21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-08
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
https://www.bis.org/publ/work807.pdf Full PDF document (application/pdf)
https://www.bis.org/publ/work807.htm (text/html)

Related works:
Journal Article: Bank intermediation activity in a low‐interest‐rate environment (2020)
Working Paper: Bank intermediation activity in a low‐interest‐rate environment (2020)
Working Paper: Bank intermediation activity in a low interest rate environment (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:807

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().