Negative Interest Rates: How Big a Challenge for Large Danish and Swedish Banks?
Electronic Access:
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Summary:
Negative policy interest rates have prevailed for some years in Denmark and are a more recent development in Sweden. Among other potential side effects, negative rates could weaken banks’ profitability by reducing net interest income, their main source of earnings. However, an analysis of financial statements at the country rather than the consolidated group level shows that bank margins have been broadly stable. At least to date, lower interest income was offset by reductions in wholesale funding costs and higher fee income. Nonetheless, the impacts on bank health and lending from negative interest rates will need to continue to be monitored closely.
Series:
Working Paper No. 2016/198
Subject:
Bank soundness Banking Central bank policy rate Deposit rates Financial sector policy and analysis Financial services Monetary policy National accounts Negative interest rates Personal income
English
Publication Date:
October 14, 2016
ISBN/ISSN:
9781475544688/1018-5941
Stock No:
WPIEA2016198
Pages:
29
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