scholarly journals Interest Rate Spreads in an Emerging Economy: The Case of Pakistan’s Commercial Banking Sector

2012 ◽  
Vol 25 (4) ◽  
pp. 987-1004 ◽  
Author(s):  
Ayesha Afzal ◽  
Nawazish Mirza
Keyword(s):  
Interest Rate ◽  
Banking Sector ◽  
Emerging Economy ◽  
Commercial Banking ◽  
Interest Rate Spreads

scholarly journals A modelling process of short-term interest rate risk management for the South African commercial banking sector

2011 ◽  
Vol 9 (1) ◽  
pp. 628-637
Author(s):  
Jiaqi Sun ◽  
J.H. Van Rooyen
Keyword(s):  
Interest Rate ◽  
South African ◽  
Inflation Targeting ◽  
Banking Sector ◽  
Empirical Finding ◽  
Interest Rate Risk ◽  
Commercial Banking ◽  
The South ◽  
Short Term ◽  
Rate Risk

This study focuses on banking book interest rate risk (IRR) management, more specifically short-term IRR management (SIRR). This type of risk is partly induced by the inflation targeting policy of the South African Reserve Bank (SARB). As a result, inflation leads to an uncertain interest rate cycle and a period of uncertain interest rate levels as it relates to lending and borrowing activities in the South African commercial banking sector. This study highlights what causes short-term interest rate risk and how the banks may forecast and manage the SIRR with reference to the inflation targeting policy. The banking industry manages a high volume of fund transactions and portfolios of investments. The banks are intricately involved in the financial markets and are therefore exposed to a large number of risk factors. A sound banking system is an important prerequisite for a country’s future economic development. One key empirical finding of this research is that 50 per cent of the South African banks agree that loans that cannot undergo immediate rate adjustments are exposed to the repo-rate adjustment after the Monetary Policy Committee (MPC) meeting. Banks surveyed see the need for the development of a short-term interest rate risk (SIRR) management process to better control such repo-rate risk. The next key empirical finding is that interest rate risk is still managed via traditional repricing gap and sensitivity analysis which is not ideal for risk management due to inherent weaknesses (such as not quantifying capital risk exposure). This agrees with the Pricewaterhousecoopers Balance Sheet Management benchmark survey

The financial sector

2020 ◽  
pp. 464-481
Author(s):  
Radha Upadhyaya ◽  
Edoardo Totolo
Keyword(s):  
Interest Rate ◽  
Banking Sector ◽  
Financial Sector ◽  
Financial Inclusion ◽  
Wealth Accumulation ◽  
Financial Depth ◽  
Key Sectors ◽  
Money Transfer ◽  
Interest Rate Spreads

This chapter traces the evolution of the financial sector in Kenya over the last 10 years. While the rise of Equity Bank and M-Pesa—a mobile money, transfer, financing, and microfinancing service—has led to Kenya being viewed as a champion in the financial inclusion agenda, we show that the story of financial reform has been complex and at times contradictory. In the 1980s and 1990s, liberalization did not lead to the fruits expected in terms of savings and investment. More recent increases in both financial depth and financial inclusion have not led to a reduction in interest rate spreads or increased credit to key sectors of the economy. This chapter shows that debates concerning the best model of regulation of the financial sector and the key methods for regulating interest rate spreads are ongoing. The chapter also discusses the role of the banking sector in election financing, and argues that the patterns of wealth accumulation are more useful than level of liberalization of the banking in explaining the likelihood of opposition parties getting higher levels of finance for elections.

scholarly journals Passing on negative interest rates

2020 ◽  
Vol 56 (4) ◽  
pp. 283-290
Author(s):  
Georg Stadtmann ◽  
Karl-Heinz Moritz ◽  
Kristin Berthold ◽  
Tobias Stadtmann
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Commercial Banking ◽  
Quantitative Easing ◽  
Negative Interest Rates ◽  
Banking Market ◽  
Excess Liquidity ◽  
Demand Deposits ◽  
The Interest Rate

AbstractSince the ECB has lowered the interest rate on deposits into negative territory, more and more commercial banks are also passing on this negative interest rate to their customers. The main aim of this paper is to answer the question under which conditions the commercial banking sector will be more or less reluctant to pass the negative deposit rate on to its private customers. We first clarify the circumstances under which demand deposits and excess liquidity arise, and what role quantitative easing plays in this context. Within a game-theoretical framework, it is derived that the pressure to pass on the negative interest rate is particularly high if there are no switching costs, and the banking market follows a Bertrand competition.

EMERGING TRENDS IN BANKING SECTOR - ITS CHALLENGES AND OPPORTUNITIES

2018 ◽  
Vol 6 (26) ◽  
Author(s):  
Karigoleshwar .
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Banking System ◽  
Major Change ◽  
Commercial Banking ◽  
Foreign Banks ◽  
Emerging Trends ◽  
Reserve Bank ◽  
Challenges And Opportunities ◽  
Multiple Regions

In financial sector the banking industry is the largest player, has also been undergoing a major change. Today the banking industry is stronger and capable of withstanding the pressures of competition. Today, we are having a fairly well developed banking system with different classes of banks – public sector banks, foreign banks, private sector banks – both old and new generation, regional rural banks and co-operative banks with the Reserve Bank of India as the fountain Head of the system. In the banking field, there has been an unprecedented growth and diversification of banking industry has been so stupendous that it has no parallel in the annals of banking anywhere in the world. The banking industry has experienced a series of significant transformations in the last few decades. Among the most important of them is the change in the type of organizations that dominate the landscape. Since the eighties, banks have increased the scope and scale of their activities and several banks have become very large institutions with a presence in multiple regions of the country.' The paper examines the new trends in commercial banking. The present era the cashless transactions, E-cheques, mobile wallets. The paper attempts to present the emerging trends and its challenges that recently emerged in the banking sector with special emphasis on digitization. It will be useful to the academicians, banking and insurance personnel, students and researchers. Common readers also know the latest innovations in banking sector

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