Does Market Interest Rates Change Bank Profitability and Risk?

Mujtaba Zia, Mucahit Kochan, Yi Liu

back

References:

  1. Akhigbe, Aigbe, Anna D. Martin, and Ann Marie Whyte. 2016. "Dodd–Frank and risk in the financial services industry." Review of Quantitative Finance and Accounting, 47: 395-415. https://doi.org/10.1007/s11156-015-0506-4

  2. Akhigbe, Aigbe, and Ann Marie Whyte. 2004. "The Gramm-Leach-Bliley Act of 1999: Risk implications for the financial services industry." Journal of Financial Research, 27(3): 435-446. https://doi.org/10.1111/j.1475-6803.2004.00093.x

  3. Albertazzi, Ugo, and Leonardo Gambacorta. 2009. "Bank profitability and the business cycle." Journal of Financial Stability, 5(4): 393-409. https://doi.org/10.1016/j.jfs.2008.10.002

  4. Al-Matari, Ebrahim Mohammed. 2023. "The determinants of bank profitability of GCC: The role of bank liquidity as moderating variable-further analysis." International Journal of Finance & Economics, 28(2): 1423-1435. https://doi.org/10.1002/ijfe.2485

  5. Anginer, Deniz, Asli Demirgüç-Kunt, and Davide S. Mare. 2018. "Bank capital, institutional environment and systemic stability." Journal of Financial Stability, 37: 97-106. https://doi.org/10.1016/j.jfs.2018.06.001

  6. Athanasoglou, Panayiotis P., Sophocles N. Brissimis, and Matthaios D. Delis. 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability." Journal of International Financial Markets, Institutions and Money, 18(2): 121-136. https://doi.org/10.1016/j.intfin.2006.07.001

  7. Balloch, Cynthia, Yann Koby, and Mauricio Ulate. 2022. "Making sense of negative nominal interest rates." Federal Reserve Bank of San Francisco. https://doi.org/10.24148/wp2022-12

  8. Beauregard, Remy, and Mark M. Spiegel. 2020. "Commercial banks under persistent negative rates." FRBSF Economic Letter, 29. https://www.frbsf.org/economic-research/wp-content/uploads/sites/4/el2020-29.pdf

  9. Bolt, Wilko, Leo De Haan, Marco Hoeberichts, Maarten RC Van Oordt, and Job Swank. 2012. "Bank profitability during recessions." Journal of Banking & Finance 36(9): 2552-2564. https://doi.org/10.1016/j.jbankfin.2012.05.011

  10. Bongiovanni, Alessio, Alessio Reghezza, Riccardo Santamaria, and Jonathan Williams. 2021. "Do negative interest rates affect bank risk-taking?" Journal of Empirical Finance, 63: 350-364. https://doi.org/10.1016/j.jempfin.2021.07.008

  11. Borio, Claudio, Leonardo Gambacorta, and Boris Hofmann. "The influence of monetary policy on bank profitability." International Finance, 20(1): 48-63. https://doi.org/10.1111/infi.12104

  12. Boungou, Whelsy. 2020. "Negative interest rates policy and banks’ risk-taking: Empirical evidence." Economics Letters, 186: 108760. https://doi.org/10.1016/j.econlet.2019.108760

  13. Brandao-Marques, Luis, Marco Casiraghi, Gaston Gelos, Güneş Kamber, and Roland Meeks. 2024. "Negative interest rate policies: A survey." Annual Review of Economics, 16: 305-328. https://doi.org/10.1146/annurev-economics-080323-042145

  14. Campmas, Alexandra. 2020. "How do European banks portray the effect of policy interest rates and prudential behavior on profitability?" Research in International Business and Finance, 51: 100950. https://doi.org/10.1016/j.ribaf.2018.09.001

  15. Chronopoulos, Dimitris K., Hong Liu, Fiona J. McMillan, and John OS Wilson. 2015. "The dynamics of US bank profitability." The European Journal of Finance, 21(5): 426-443. https://doi.org/10.1080/1351847X.2013.838184

  16. Correa, Ricardo, and Linda S. Goldberg. 2022. "Bank complexity, governance, and risk." Journal of Banking & Finance, 134: 106013. https://doi.org/10.1016/j.jbankfin.2020.106013

  17. DeAngelo, Harry, and René M. Stulz. 2015. "Liquid-claim production, risk management, and bank capital structure: Why high leverage is optimal for banks." Journal of Financial Economics 116(2): 219-236. https://doi.org/10.1016/j.jfineco.2014.11.011

  18. Demirgüç-Kunt, Ash, and Harry Huizinga. 1999. "Determinants of commercial bank interest margins and profitability: some international evidence." The World Bank Economic Review, 13(2): 379-408. https://doi.org/10.1093/wber/13.2.379

  19. Eggertsson, Gauti B., Ragnar E. Juelsrud, Lawrence H. Summers, and Ella Getz Wold. 2024. "Negative nominal interest rates and the bank lending channel." Review of Economic Studies, 91(4): 2201-2275. https://doi.org/10.1093/restud/rdad085

  20. Entrop, Oliver, Christoph Memmel, Benedikt Ruprecht, and Marco Wilkens. 2015. "Determinants of bank interest margins: Impact of maturity transformation." Journal of Banking & Finance, 54: 1-19. https://doi.org/10.1016/j.jbankfin.2014.12.001

  21. Filson, Darren, and Saman Olfati. 2014. "The impacts of Gramm–Leach–Bliley bank diversification on value and risk." Journal of Banking & Finance, 41: 209-221. https://doi.org/10.1016/j.jbankfin.2014.01.019

  22. Gambacorta, Leonardo, and Paolo Emilio Mistrulli. 2014. "Bank heterogeneity and interest rate setting: what lessons have we learned since Lehman Brothers?" Journal of Money, Credit and Banking, 46 (4): 753-778. https://doi.org/10.1111/jmcb.12124

  23. Genay, Hesna, and Rich Podjasek. 2014. "What is the impact of a low interest rate environment on bank profitability?" Chicago Fed Letter, July Issue.
    http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2014/cfljuly2014_324.pdf

  24. Haba, Shunsuke, Yuichiro Ito, and Yoshiyasu Kasai. 2025. The Impact of Negative Interest Rate Policy on Interest Rate Formation and Lending. No. 25-E-1. Bank of Japan. https://www.boj.or.jp/en/research/wps_rev/wps_2025/data/wp25e01.pdf

  25. Hack, Mark, and Sam Nicholls. 2021. "Low interest rates and bank profitability–the international experience so far." RBA Bulletin, June. https://www.rba.gov.au/publications/bulletin/2021/jun/pdf/low-interest-rates-and-bank-profitability-the-international-experience-so-far.pdf

  26. Heider, Florian, Farzad Saidi, and Glenn Schepens. 2021. "Banks and negative interest rates." Annual Review of Financial Economics, 13(1): 201-218. https://doi.org/10.1146/annurev-financial-111320-102646

  27. Hanson, James A., and Roberto de Rezende Rocha. 1986. "High interest rates, spreads, and the costs of intermediation: two studies."  Washington, D. C. U.S.A.: Word bank. https://lccn.loc.gov/86023343

  28. Ho, Thomas SY, and Anthony Saunders. 1981. "The determinants of bank interest margins: theory and empirical evidence." Journal of Financial and Quantitative analysis, 16(4): 581-600. https://doi.org/10.2307/2330377

  29. Laeven, Luc, Lev Ratnovski, and Hui Tong. 2016. "Bank size, capital, and systemic risk: Some international evidence." Journal of Banking & Finance, 69: S25-S34. https://doi.org/10.1016/j.jbankfin.2015.06.022

  30. López-Penabad, Maria Celia, Ana Iglesias-Casal, and José Fernando Silva Neto. 2022. "Effects of a negative interest rate policy in bank profitability and risk taking: Evidence from European banks." Research in International Business and Finance, 60: 101597. https://doi.org/10.1016/j.ribaf.2021.101597

  31. Mamun, Abdullah, M. Kabir Hassan, and Neal Maroney. 2005. "The wealth and risk effects of the Gramm-Leach-Bliley Act (GLBA) on the US banking industry." Journal of Business Finance & Accounting, 32(1-2): 351-388. https://doi.org/10.1111/j.0306-686X.2005.00597.x

  32. Martynova, N., Ratnovski, L., & Vlahu, R. 2020. Bank profitability, leverage constraints, and risk-taking. Journal of Financial Intermediation, 44: 100821. https://doi.org/10.1016/j.jfi.2019.03.006

  33. Saif-Alyousfi, Abdulazeez YH. 2022. "Determinants of bank profitability: evidence from 47 Asian countries." Journal of Economic Studies, 49(1): 44-60. https://doi.org/10.1108/JES-05-2020-0215

  34. Saghi-Zedek, Nadia, and Amine Tarazi. 2015. "Excess control rights, financial crisis and bank profitability and risk." Journal of Banking & Finance, 55: 361-379. https://doi.org/10.1016/j.jbankfin.2014.10.011

  35. Saunders, Anthony, and Liliana Schumacher. 2000. "The determinants of bank interest rate margins: an international study." Journal of International Money and Finance, 19(6) 813-832. https://doi.org/10.1016/S0261-5606(00)00033-4

  36. Saunders, Anthony, Elizabeth Strock, and Nickolaos G. Travlos. 1990. "Ownership structure, deregulation, and bank risk taking." the Journal of Finance, 45(2): 643-654. https://doi.org/10.1111/j.1540-6261.1990.tb03709.x

  37. Varotto, Simone, and Lei Zhao. 2018. "Systemic risk and bank size." Journal of International Money and Finance, 82: 45-70. https://doi.org/10.1016/j.jimonfin.2017.12.002

  38. Windsor, Callan, Terhi Jokipii, and Matthieu Bussiere. 2023. “The impact of interest rates on bank profitability: A retrospective assessment using new Cross-country bank-level data.” Reserve Bank of Australia. https://www.rba.gov.au/publications/rdp/2023/pdf/rdp2023-05.pdf

    [39] Zia, Mujtaba, Imre Karafiath, and Niranjan Tripathy. 2018. "Bank capital, the announcement of the federal reserve's term auction facility, and bank borrowing during the financial crisis Of 2007–2008." Journal of Financial Research, 41(4): 485-506. https://doi.org/10.1111/jfir.12160
Copyright © 2009 | All rights reserved