The Consequences of Low Interest Rates for the Australian Banking Sector

Anthony Brassil

RBA Annual Conference Papers from Reserve Bank of Australia

Abstract: There is a vast international literature exploring the consequences of low interest rates for various banking sectors. In this paper, I explore how this international literature relates to the Australian banking sector, which operates differently to other jurisdictions. In the face of low rates, the profitability of Australian banks has likely been less adversely affected than what the international literature would predict, but the flip side to this is that the pass-through of monetary policy to lending rates may have been more muted. I then use a recent advance in macro-financial modelling to explore whether pass-through in Australia could turn negative—the so called 'reversal rate'—and find that the features of the Australian banking system mean a reversal rate is highly unlikely to exist in Australia.

Keywords: low interest rates; Australian banks; banking systems; monetary policy pass-through; lending rates; deposit rates; reversal rates; credit risk (search for similar items in EconPapers)
Date: 2022-06, Revised 2022-12
Note: Paper presented at the RBA's annual conference 'The Causes, Challenges and Consequences of the Low Interest Rate Environment', Sydney, 28–29 June 2022.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.rba.gov.au/publications/confs/2022/pdf ... nce-2022-brassil.pdf (application/pdf)

Related works:
Working Paper: The Consequences of Low Interest Rates for the Australian Banking Sector (2022)
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:rba:rbaacp:acp2022-04

Access Statistics for this paper

More papers in RBA Annual Conference Papers from Reserve Bank of Australia Contact information at EDIRC.
Bibliographic data for series maintained by Paula Drew ().