The influence of monetary policy on bank profitability Evidence from Emerging economies in Asia and Latin America/ Yongyut Srisantisuk
Imprint
2017
Descript
56 leaves: tables
SUMMARY
This paper explores the impact of monetary policy via interest rates level and yield curve slope on bank profitability measured by net interest margin (“NIM”). The paper uses panel data for 219 commercial banks in 12 major emerging countries in Asia and Latin America for the period 2000 to 2016 (quarterly data). The paper finds a positive and concave relationship between interest rates, yield curve slope and banks’ NIM in general.
In other words, decreasing in short-term interest rate erodes NIM. This positive relationship is found to be stronger after global financial crisis comparing to before the crisis period. In addition, this paper also finds that different size of bank exhibits different sensitivities to interest rates, yield curve slope. Large banks’ NIM will be affected by changing in interest rates less than small banks.
