The new normal : how the negative interest rates policy affected Portuguese Banks’ profitability

• Autor(a) principal: Quintela, Ana Margarida Gonçalves Tojal de Lemos
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/29144
• topic: Portugal; Negative interest rates; Bank profitability; Central banks; Taxas de juro negativas; Rentabilidade bancária; Bancos centrais; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This Dissertation analyzes how the Negative Interest Rate Policy (NIRP) adopted by the European Central Bank (ECB) affected the profitability of Portuguese banks. We use publicly available data for 36 Portuguese Banks available on the Portuguese Bank Association (APB – Associação Portuguesa de Bancos) for 2010-2017, covering the period before and after the introduction of the policy. The present Dissertation employs a Multiple Regression analysis, using Net Interest Margin (NIM) as the main measure of Banks’ performance. This research’s findings suggest that banks with higher excess liquidity are more affected by the NIRP since the policy works as a tax on excess liquidity hoarding. Moreover, Portuguese banks are not able to pass the negative interest rates into the depositors but they seem to be able overcome the constraint on deposit rates. Finally, our results do not show any clear relationship between NIM and the change in the level of short-term rates nor the change in slope of the yield curve.