scholarly journals The Japanese Banks in the Lasting Low-, Zero- and Negative-Interest Rate Environment

2021 ◽  
Vol 54 (1) ◽  
pp. 1-16
Author(s):  
Taiki Murai ◽  
Gunther Schnabl
Keyword(s):  
Interest Rate ◽  
Commercial Banks ◽  
Business Environment ◽  
Capital Allocation ◽  
Japanese Economy ◽  
Concentration Process ◽  
Allocation Function ◽  
Rate Environment ◽  
Bubble Economy ◽  
Interest Margins

The bursting of the Japanese bubble economy in the early 1990s put the stage for a lasting low-, zero-, and negative-interest rate environment, which fundamentally changed the business environment for the Japanese commercial banks. On the income side, with interest margins becoming increasingly depressed, net interest revenues declined, which forced the banks to expand revenues from fees and commissions. The banks had to cut costs by reducing the number of employees, closing branches and merging into larger banks. The gradual concentration process has most recently cumulated in the relaxation of the monopoly law. With the capital allocation function of banks being undermined, the Japanese economy has become zombified, suffering from anemic growth.

scholarly journals Analysis of the Impact of Interest Rate Liberalization on Financial Services Management in Chinese Commercial Banks

2020 ◽  
Vol 2020 ◽  
pp. 1-11
Author(s):  
Tian Meng ◽  
Mengnan Sun ◽  
Yixuan Zhao ◽  
Bo Zhu
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Financial Services ◽  
Commercial Banks ◽  
Two Dimensions ◽  
Interest Spreads ◽  
Net Interest Margin ◽  
Interest Margins ◽  
Marketization Reform ◽  
The Impact

With the advancement of China's interest rate marketization reform, commercial banks' net interest margin has narrowed. This paper selects 16 representative listed banks as the research object and conducts an empirical analysis from the two dimensions: profit level and profit structure. The study finds that the marketization of interest rates promoted the narrowing of net interest margins caused by the narrowing of net interest margins, and the profitability of commercial banks was suppressed. The narrowing of net interest spreads forced commercial banks to actively expand their intermediate business activities and adjust business structure correspondingly. The narrowing of net interest spreads has different impacts on the profitability of commercial banks of different sizes.

Ultra-Low Interest Rates and Growth in Emerging East Asia from a Hayekian Perspective

2019 ◽  
pp. 294-316
Author(s):  
Gunther Schnabl
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
East Asia ◽  
Exchange Rate Regime ◽  
Growth Dynamics ◽  
Capital Allocation ◽  
Industrialized Countries ◽  
Credit Expansion ◽  
Low Interest Rates ◽  
Rate Environment

The chapter explores business cycles and growth dynamics in emerging East Asia within an ultra-low interest rate environment from the perspective of the monetary overinvestment theories of Mises and Hayek. It argues that, given a low interest rate environment in the large industrialized countries, the likelihood of overinvestment and therefore a crisis in emerging East Asia has increased independently from the exchange rate regime. Overinvestment can take the form of unsustainable booms on stock and real estate markets (as in Southeast Asia prior to the Asian crisis) or the misallocation of funds due to subsidized state-directed capital allocation (as is currently occurring in the People’s Republic of China). If further credit expansion counteracts a crisis triggered by a preceding overinvestment boom, it paralyses growth in the long term, as Japan experienced.

The effect of the Federal Reserve interest rate policies on the returns of commercial banks stocks

2007 ◽  
Vol 11 (4) ◽  
pp. 349-359 ◽  
Author(s):  
F Phillip Ghazanfari ◽  
Henry Charles Rogers ◽  
Paul Sarmas
Keyword(s):  
Interest Rate ◽  
Federal Reserve ◽  
Commercial Banks

scholarly journals An Empirical Analysis of Factors Affecting Bank Interest Margins: Evidence from the South East European Countries

2018 ◽  
Vol 21 (2) ◽  
pp. 81-98
Author(s):  
Mehmed Ganić
Keyword(s):  
Interest Rate ◽  
Empirical Analysis ◽  
Banking Sector ◽  
Output Growth ◽  
The South ◽  
Factors Affecting ◽  
East European ◽  
Interest Margins ◽  
See Region ◽  
Bank Concentration

This paper provides an empirical analysis of factors affecting Bank Interest Margins in eight countries of the South‑East European (SEE) region between 2000 and 2014. The purpose of this paper is to examine and investigate the main drivers of Bank Interest Rate Margins across selected countries throughout the SEE region. Also, the study explored the relationship between the dependent variable Interest Rate Spread (IRS – as a proxy variable for measuring variation in Bank Interest Rate Margins) and a set of selected banks’ specific variables in SEE by employing panel data estimation methodology. This research is based on aggregate data for the whole banking sector of each country. In line with some expectations, our findings confirm the importance of credit risk, bank concentration operative efficiency, and inflation expectations in determining Bank Interest Rate Margins. Interestingly, in contrast to the majority of recent empirical research, the study found an inverse relationship between the bank concentration variable and Bank Interest Rate Margins as well as between the operational efficiency variable and Bank Interest Rate Margins. Also, the study could not find statistically significant evidence that Bank Interest Rate Margins are determined by output growth, bank profitability (measured by ROA) or liquidity risk.

How Do Homeowners Choose Between Fixed and Adjustable Rate Mortgages?

2016 ◽  
Vol 06 (04) ◽  
pp. 1650013 ◽  
Author(s):  
Yevgeny Mugerman ◽  
Moran Ofir ◽  
Zvi Wiener
Keyword(s):  
Interest Rate ◽  
Housing Prices ◽  
Optimal Choice ◽  
Housing Finance ◽  
Short Term ◽  
Fixed Rate ◽  
High Interest Rate ◽  
Theoretical Literature ◽  
Rate Environment ◽  
Adjustable Rate

Housing is the most important asset in the portfolio of most households. Understanding the households’ decision on housing finance has important implications from a policy perspective, due to the effects it may have on the housing prices, on the housing market stability and on household welfare. The theoretical literature on housing finance focused on figuring out the optimal choice between fixed rate mortgages (FRMs) and adjustable rate mortgages (ARMs). We argue that the standard economic criteria are sometimes inadequate to explain household’s choices, which may be motivated by psychological factors. In other words, we claim that household’s choice depends only partially on the findings of the theoretical literature. We examine the effect of changes in the short-term market interest rate on the households’ choice between FRMs and ARMs. We test this effect using a unique data provided to us by the Bank of Israel, which contains detailed information on the household’s decision between FRM and ARM contracts in Israel in the past decade. The results of our analysis demonstrate a significant association between FRM preference and short-term interest rate reduction. Moreover, we find that the change in the short-term interest rate is more salient to the borrowers in periods of a high interest rate environment. We attribute these findings to Tversky and Kahneman (1974) availability and representativeness heuristics.

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