The development of bank profitability in Denmark, Sweden and Switzerland during a period of ultra-low and negative interest rates
Thomas Scheiber (),
Maria Silgoner and
Caroline Stern ()
Additional contact information
Thomas Scheiber: Oesterreichische Nationalbank, Foreign Research Division, http://www.oenb.at
Caroline Stern: Oesterreichische Nationalbank (OeNB), Foreign Research Division
Focus on European Economic Integration, 2016, issue 3, 8–28
In June 2014, the ECB decided to lower its interest rate on the deposit facility for the first time to below zero with the aim of countering deflation risks. Negative central bank interest rates have no precedent in history and thus raise questions about potential unintended side effects on the economy and the banking system. To evaluate the risks of such side effects, we investigate the development of bank profitability in three European countries that look back on more than one year of negative interest rates: Denmark, Sweden and Switzerland. Overall we conclude that in these countries, negative interest rates have so far not resulted in a significant reduction of bank profitability and particularly of net interest income. Declines in interest income have been more than compensated for by declines in interest expenses. Most fears about unintended consequences of negative interest rates, such as a rush to cash or a reduction of credit supply, have so far not materialized.
Keywords: low interest rate environment; monetary transmission; bank profitability (search for similar items in EconPapers)
JEL-codes: E43 E52 G21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.oenb.at/dam/jcr:e1d6151c-a826-4c08-b82 ... r_silgoner_stern.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbfi:y:2016:i:3:b:1
Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Access Statistics for this article
Focus on European Economic Integration is currently edited by Doris Ritzberger-Gruenwald and Helene Schuberth
More articles in Focus on European Economic Integration from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Markus Eller ().