Banks Net Interest Margin and the Level of Interest Rates

Konferenzbeitrag

An increase in the level of interest rates is said to have a negative impact on banks net interest margins in the short run. Using a time series of more than 40 years for the German banking system, we show that the opposite effect exists in the long run, where an increase in the level of interest rates by 100 basis points leads to an estimated increase of 7 basis points in the banks net interest margin. In addition, we analyze the consequences of the low-interest rate environment and find that banks interest margins for retail deposits, especially for term deposits, have declined by up to 97 basis points.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Finance and Banks I ; No. D09-V1

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models ; Interest Rates: Determination, Term Structure, and Effects

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Busch, Ramona ; Memmel, Christoph
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/113187
• Last update: 10.03.2025, 11:44 AM CET