scholarly journals Bank Profitability and Risk-Taking Under Low Interest Rates

2017 ◽  
Author(s):  
Jacob Antoon Bikker ◽  
Tobias Vervliet
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Bank Profitability ◽  
Low Interest Rates

scholarly journals IMPLICATIONS OF LOW INTEREST RATES ON BANK PROFITABILITY AND RISK-TAKING

2021 ◽  
pp. 1-27
Author(s):  
MANUELA ENDER ◽  
CORINNA NEUHOFER
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Qualitative Content Analysis ◽  
Negative Influence ◽  
Mitigation Strategies ◽  
Bank Profitability ◽  
Interest Income ◽  
Low Interest Rates ◽  
State Of Research ◽  
The Impact

This paper investigates the effect of low interest rates on bank profitability and risk-taking. A comprehensive depiction of the current state of research was developed based on systematic literature review and qualitative content analysis. A low interest rate environment, as present in many economies, has various implications on bank profitability and risk-taking. A positive relationship is found between interest rates and net interest income, while the relationship with non-interest income is negative. Also, banks increase risk-taking in search for yield. The influence on bank profitability is highly dependent on several factors, but in most papers a negative influence is found. Throughout the world banks have managed to limit the impact through mitigation strategies, such as diversification, which are presented as guidance.

scholarly journals Low interest rates and executive risk-taking incentives: Evidence from the United States

2020 ◽  
pp. 234094442092771
Author(s):  
Paula Castro ◽  
Maria T Tascon ◽  
Francisco J Castaño ◽  
Borja Amor-Tapia
Keyword(s):  
United States ◽  
Interest Rates ◽  
Risk Taking ◽  
The United States ◽  
Jel Classification ◽  
Short Term ◽  
Monetary Policies ◽  
Stock Return Volatility ◽  
Low Interest Rates ◽  
Institutional Shareholders

This article contributes to the literature by indicating how certain monetary policies impact the compensation incentives of US managers to adopt riskier business policies. Specifically, based on the agency problems between shareholders and managers and between shareholders and creditors, a research framework is developed to identify the influence of low interest rates on managers’ risk-taking incentives proxied by the sensitivity of executive compensation to stock return volatility (Vega). We examine 1,293 firms in the United States between 2000 and 2016, and the results indicate that low interest rates increase the managers’ short-term risk-taking incentives and that those incentives contribute to the risk effectively taken by the firm. Our results are robust to the use of alternative monetary proxies and to the presence of passive versus active institutional shareholders. JEL CLASSIFICATION E41; E43; E51; M12; M52

scholarly journals A Literature Review of Non-Performing Loan

2021 ◽  
Vol 2 (5) ◽  
pp. 366-373
Author(s):  
Ardhi Khairi ◽  
Bahri Bahri ◽  
Bhenu Artha
Keyword(s):  
Financial Crisis ◽  
Literature Review ◽  
Interest Rates ◽  
Banking System ◽  
Retail Banking ◽  
Literature Study ◽  
Bank Profitability ◽  
Loan Portfolios ◽  
Low Interest Rates ◽  
Asset Quality

Lending is the primary business of retail banking and non-performing loans (NPLs) have been the focus of attention in recent years. In the wake of the 2008–2010 financial crisis, non-performing loans (NPLs) had increased everywhere, but in some countries they had reached unprecedented heights. Several banks have experienced a particularly challenging period over recent years and the Great Financial Crisis has highlighted the weakness of the banking system and the need to further investigate banks’ asset quality and transparency from both a regulatory and an accounting perspective, which pressure by different institutions for a more accurate assessment of loan portfolios led to the general need for higher provisioning in a period characterised by extremely low interest rates and low bank profitability. The objective of this research is to determine the factors associated with non-performing loans. We presented a literature study using systematic literature review of relevant publications and as a result of this process, we included 21 articles and then examined the bibliographical references to check the validity of the inquiry and to avoid any potential omissions. We identified several variables that affect NPLs and those that are influenced by NPLs. We found no variables that associate with policies, and strongly suggest research for variables that associate with policies.

scholarly journals Collateralized borrowing and risk taking at low interest rates

2016 ◽  
Vol 85 ◽  
pp. 62-83 ◽  
Author(s):  
Simona E. Cociuba ◽  
Malik Shukayev ◽  
Alexander Ueberfeldt
Keyword(s):  
Interest Rates ◽  
Risk Taking ◽  
Low Interest Rates
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