Are Banks Sensitive to Monetary and Exchange Rate Policy?
20 Pages Posted: 4 Mar 2005 Last revised: 25 Jun 2013
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: Suggested Citation
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