Citation

Discussion Paper Details

Please find the details for DP13980 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Bank intermediation activity in a low interest rate environment

Author(s): Claudio Borio, Michael Brei and Leonardo Gambacorta

Publication Date: September 2019

Keyword(s): bank business models, financial crisis and monetary policy

Programme Area(s): Financial Economics

Abstract: This paper investigates how the prolonged period of low interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced economies during the period 1994â??2015. We find that low interest rates induce banks to shift their activities from interest-generating to fee-related and trading activities. This rebalancing is stronger for low capitalised banks. Banks also moderately adjust their funding structure, away from short-term market funding towards deposits. We observe a concomitant decline in the risk-weighted asset ratio and a reduction in loan-loss provisions, which is consistent with signs of evergreening.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13980

Bibliographic Reference

Borio, C, Brei, M and Gambacorta, L. 2019. 'Bank intermediation activity in a low interest rate environment'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13980