Banks’ Profitability in the Period of Low and Negative Interest Rates

Mariana Calheiros de Figueiredo Dias Gonçalves

Diplomová práce

Bank’s Profitabillity in Period of Low and Negative Interest Rates

Anotace:

In the financial landscape of the Euro Area, the role and profitability of banks are influenced by unconventional monetary policies and market changes. This study analyzes the impact of low and negative interest rates on banks' profitability indicators, specifically net interest margin (NIM), return on assets (ROA) and return on equity (ROE). Utilizing data from 2690 banks from 2004 to 2024, a linear regression is used to draw the conclusion that low or negative interest rates do not mean lower bank profitability. Moreover, the analysis of market concentration shows that in countries with significant market concentration there is a positive correlation between profitability and market concentration. The results provide important information for stakeholders, emphasizing how difficult it is for banks to be profitable in the context of continuous changing monetary policies and market conditions.

Abstract:

In the financial landscape of the Euro Area, the role and profitability of banks are influenced by unconventional monetary policies and market changes. This study analyzes the impact of low and negative interest rates on banks' profitability indicators, specifically net interest margin (NIM), return on assets (ROA) and return on equity (ROE). Utilizing data from 2690 banks from 2004 to 2024, a linear regression is used to draw the conclusion that low or negative interest rates do not mean lower bank profitability. Moreover, the analysis of market concentration shows that in countries with significant market concentration there is a positive correlation between profitability and market concentration. The results provide important information for stakeholders, emphasizing how difficult it is for banks to be profitable in the context of continuous changing monetary policies and market conditions.

Klíčová slova

Bank Profitability, Banks, Interest Rates, Low and Negative Interest Rate Environment, Market Concentration, Net Interest Margin, Return on Assets, Return on Equity

Keywords

Banks, Interest Rates, Net Interest Margin, Low and Negative Interest Rate Environment, Market Concentration, Return on Assets, Return on Equity, Bank Profitability

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 16. 5. 2024

Obhajoba závěrečné práce

• Obhajoba proběhla 2024
• Vedoucí: Jiří Witzany

Vysoká škola ekonomická v Praze

Magisterský studijní program:
Finance and Accounting