Are Banks Sensitive to Monetary and Exchange Rate Policy?

20 Pages Posted: 4 Mar 2005 Last revised: 25 Jun 2013

See all articles by Margarida Abreu

Margarida Abreu

ISEG-UTL; Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); Instituto Superior de Economia e Gestão - CISEP

Victor Mendes

CMVM - Comissao do Mercado de Valores Mobiliarios

Date Written: March 1, 2005

Abstract

This paper studies bank's sensitiveness to monetary and exchange rate policy. Although some of the past studies of bank performance use macroeconomic explanatory variables, this is the first study to examine the impact of the exchange rate and monetary policy on bank interest margins and profitability, combining a broad cross section of bank balance sheet and income statement information in 12 European countries with a time series dimension (for the period 1988-98).

The main conclusions of the study are threefold. First, monetary and exchange rate policy do matter. Second, the impact on commercial banks is different from the impact on other types of banks. Third, bank size is relevant.

Keywords: Banking, interest margins, profitability, exchange rate crises

JEL Classification: F31, G15, G21, E63

Suggested Citation

Abreu, Margarida and Mendes, Victor, Are Banks Sensitive to Monetary and Exchange Rate Policy? (March 1, 2005). Available at SSRN: https://ssrn.com/abstract=676411 or http://dx.doi.org/10.2139/ssrn.676411

Margarida Abreu (Contact Author)

ISEG-UTL ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE) ( email )

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

Instituto Superior de Economia e Gestão - CISEP ( email )

Rua Miguel Lupi 20
Lisboa, 1200-725
Portugal

Victor Mendes

CMVM - Comissao do Mercado de Valores Mobiliarios ( email )

Avenida Fontes Pereira de Melo, 21
Lisbon, 1056-801
Portugal
(351) 213177000 (Phone)
(351) 213537077/8 (Fax)

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