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Contribution Details

Type Master Thesis
Scope Discipline-based scholarship
Title Negative Interest Rates and Bank Profitability: Theory and Evidence
Organization Unit
  • Cimino Sébastien
  • Jean-Charles Rochet
  • Nataliya Klimenko
  • English
Institution University of Zurich
Faculty Faculty of Business, Economics and Informatics
Date November 2017
Abstract Text This paper investigates how monetary policies which use negative interest rates as instrument affect bank credit supply and profitability. We use data for 48 large international banks in 7 major advanced economies for the period 2012-2016 . Overall, we find a positive relationship between the introduction of negative interest rates and credit supply on one hand, and a negative relationship between interest rates and bank profitability – return on average assets, return on average equity and net interest margin – on the other hand. This suggests that the negative impact of decreasing interest rates on profitability dominates the positive one induced by an increase of credit supply.
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