Template-Type: ReDIF-Paper 1.0
Author-Name: Michael Brei
Author-X-Name-First: Michael
Author-X-Name-Last: Brei
Author-Name: Claudio Borio
Author-X-Name-First: Claudio
Author-X-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo 
Author-X-Name-Last: Gambacorta
Title: Bank intermediation activity in a low interest rate environment
Abstract: This paper investigates how the prolonged period of low interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced economies during the period 1994–2015. We find that low interest rates induce banks to shift their activities from interest-generating to fee-related and trading activities. This rebalancing is stronger for low capitalised banks. Banks also moderately adjust their funding structure, away from short-term market funding towards deposits. We observe a concomitant decline in the risk-weighted asset ratio and a reduction in loan-loss provisions, which is consistent with signs of evergreening.
Length: 31 pages
Creation-Date: 2019-08
File-URL: https://www.bis.org/publ/work807.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work807.htm
File-Format: text/html
Number: 807
Classification-JEL: C53, E43, E52, G21
Keywords: monetary policy, bank business models, financial crisis
Handle: RePEc:bis:biswps:807