Smaller Banks Less Able to Withstand Flattening Yield Curve
4 Pages Posted: 13 Jul 2018 Last revised: 29 Apr 2020
Date Written: 2018
Abstract
For the overall U.S. banking system, the effect on profitability of yield-curve flattening—the lowering of the difference between the yields of short- and long-term debt—lasts about a year and is relatively small. After the first year, the impact on large banks’ profitability becomes positive; for smaller institutions, it stays negative and becomes larger. Recent yield-curve flattening is likely to more strongly affect smaller banks, reducing their profitability.
Suggested Citation: Suggested Citation
Kapinos, Pavel S. and Musatov, Alex, Smaller Banks Less Able to Withstand Flattening Yield Curve (2018). Economic Letter, Vol. 13, Issue 8, pp. 1-4, 2018, Available at SSRN: https://ssrn.com/abstract=3211866
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