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

Thesis title: Banks’ Profitability in the Period of Low and Negative Interest Rates
Author: Calheiros de Figueiredo Dias Gonçalves, Mariana
Thesis type: Diploma thesis
Supervisor: Witzany, Jiří
Opponents: Teplý, Petr
Thesis language: English
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.
Keywords: Banks; Interest Rates; Net Interest Margin; Low and Negative Interest Rate Environment; Market Concentration; Return on Assets; Return on Equity; Bank Profitability
Thesis title: Bank’s Profitabillity in Period of Low and Negative Interest Rates
Author: Calheiros de Figueiredo Dias Gonçalves, Mariana
Thesis type: Diplomová práce
Supervisor: Witzany, Jiří
Opponents: Teplý, Petr
Thesis language: English
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.
Keywords: Bank Profitability; Banks; Interest Rates; Low and Negative Interest Rate Environment; Market Concentration; Net Interest Margin; Return on Assets; Return on Equity

Information about study

Study programme: Finance and Accounting
Type of study programme: Magisterský studijní program
Assigned degree: Ing.
Institutions assigning academic degree: Vysoká škola ekonomická v Praze
Faculty: Faculty of Finance and Accounting
Department: Department of Banking and Insurance

Information on submission and defense

Date of assignment: 12. 12. 2023
Date of submission: 16. 5. 2024
Date of defense: 11. 9. 2024
Identifier in the InSIS system: https://insis.vse.cz/zp/86879/podrobnosti

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