Year: 2017
Author: Busch, Ramona, Memmel, Christoph
Credit and Capital Markets – Kredit und Kapital, Vol. 50 (2017), Iss. 3 : pp. 363–392
Abstract
The prevailing view in the literature is that, in the long run, an increase in the level of interest rates will impact positively on banks' net interest margins. Using a time series of more than 40 years for the German banking system, we confirm this effect (the net interest margin increases by 7 basis points for every 100 basis point increase in the interest rate level). What is more, we show that the opposite effect exists in the short run. In addition, we analyze the consequences of the low-interest-rate environment and find that banks' interest margins on retail deposits, especially term deposits, have declined by up to 97 basis points.
Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/ccm.50.3.363
Credit and Capital Markets – Kredit und Kapital, Vol. 50 (2017), Iss. 3 : pp. 363–392
Published online: 2017-09
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 30
Keywords: G21 Net interest margin level of interest rates
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| Section Title | Page | Action | Price |
|---|---|---|---|
| Ramona Busch / Christoph Memmel: Banks’ Net Interest Margin and the Level of Interest Rates | 1 |