Bank Margins and Profits in a World of Negative Rates

Research output: Contribution to journalArticle

Electronic versions


  • 2019 Bank margins and profits in a world of negative rates_Accepted

    Accepted author manuscript, 614 KB, PDF document

    Embargo ends: 28/02/21

    Licence: CC BY-NC-ND Show licence


By investigating the influence of negative interest rate policy (NIRP) on bank margins and profitability, this paper identifies country- and bank- specific characteristics that amplify or weaken the effect of NIRP on bank performance. Using a dataset comprising 7,359 banks from 33 OECD member countries over 2012-2016 and a difference-in-differences methodology, we find that bank margins and profits fell in NIRP-adopter countries compared to countries that did not adopt the policy. Moreover, this adverse NIRP effect depends on bank specific-characteristics such as size, funding structure, business models, assets repricing and product – line specialization. The effectiveness of the pass-through mechanism of NIRP can also be affected by the characteristics of a country's banking system, namely, the level of competition and the prevalence of fixed/floating lending rates.


  • Negative interest rates, bank profitability, NIMs, difference-in-differences, Propensity score matching
Original languageEnglish
Article number105613
JournalJournal of Banking and Finance
Early online date22 Aug 2019
Publication statusPublished - Oct 2019
View graph of relations