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Low interest rates and banks’ interest margins: Does belonging to a banking group matter?

Isabel Argimon, Jayson M. Danton, Jakob de Haan, Javier Rodriguez-Martin and Maria Rodriguez-Moreno

Journal of Banking & Finance, 2023, vol. 154, issue C

Abstract: Using data for a large sample of banks from 31 OECD countries over 1995–2018, we analyze the impact of belonging to a banking group on banks’ net interest margins. Our results confirm a positive relationship between interest rates and interest margins, which is stronger in a low-interest rate environment. For banks that are foreign subsidiaries of a banking group, we find that interest margins are less sensitive to the local interest rate. Our results show that such foreign subsidiaries are also sensitive to the interest rate prevailing in the group's headquarters.

Keywords: Bank profitability; Monetary policy transmission; Net interest margin; Low interest rates; Banking groups (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Low Interest Rates and Banks' Interest Margins: Does Belonging to a Banking Group Matter? (2021) Downloads
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DOI: 10.1016/j.jbankfin.2023.106966

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