Low rates have small effect on bank profitability – researchers
A 100bp rate cut results in 5bp fall in banks’ net interest margins on average, study shows
Low or falling interest rates have a small effect on banks’ profitability, researchers found in a study involving 10 central banks.
The researchers used confidential data from around 1,500 banks across the 10 countries between 2000 and 2019, a period when central banks lowered interest rates to reduce the risk of deflation.
The study, organised by the International Banking Research Network (IBRN), involves the central banks of Canada, Switzerland, Norway, Australia, the Czech Republic, France
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