EconPapers    
Economics at your fingertips  
 

"Low-For-Long� Interest Rates and Banks' Interest Margins and Profitability: Cross-Country Evidence

Stijn Claessens (), Nicholas Coleman () and Michael Donnelly

No 11842, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Interest rates in many advanced economies have been low for almost a decade now and are often expected to remain so. This creates challenges for banks. Using a sample of 3,385 banks from 47 countries from 2005 to 2013, we find that a one percentage point interest rate drop implies an 8 basis points lower net interest margin, with this effect greater (20 basis points) at low rates. Low rates also adversely affect bank profitability, but with more variation. And for each additional year of “low for long†, margins and profitability fall by another 9 and 6 basis points, respectively.

Keywords: Bank profitability; interest rates; Low-for-long; Net interest margin (search for similar items in EconPapers)
JEL-codes: E43 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-mac
Date: 2017-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11842 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
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:cpr:ceprdp:11842

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=11842

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-10-09
Handle: RePEc:cpr:ceprdp:11842