Low Interest Rates and Banks' Interest Margins: Does Deposit Market Concentration Matter?

Nimrod Segev, Sigal Ribon, Michael Kahn () and Jakob de Haan
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Michael Kahn: Bank of Israel

No 2021.16, Bank of Israel Working Papers from Bank of Israel

Abstract: Using a sample of 7,919 banks from 30 OECD countries over 1995–2019, we examine the impact of low interest rates 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. In more concentrated markets, however, interest margins are less sensitive to the level of interest rates as income and expense interest rate sensitivities closely match. But our results also suggest that the effect of market concentration on the link between interest ratesand interest margins is weaker when interest rates approach zero.

Pages: 40 pages
Date: 2021-10
New Economics Papers: this item is included in nep-com and nep-fdg
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https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2021.16.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: Low Interest Rates and Banks’ Interest Margins: Does Deposit Market Concentration Matter? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:boi:wpaper:2021.16

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