Monetary policy and European banks

: a study of the role of interest rates on profitability

Abstract

Interest rates are one of the most accompanied themes nowadays. This study is about how monetary policy interest rates impact profitability of European banks. Using a panel of 20 European countries and 359 banks between 2013 and 2022 – a period of low interest rates - and econometric models, I found that interest rates do impact profitability components of European banks, but are not the main component that explains profitability, as the models tested suggest that interest rates only explain a small part of it. The conclusions obtained from this paper contribute to the literature related with monetary policy and profitability and leave an open door to analyze the effects when there is available data for the moment we are in now, of rising interest rates.

Date of Award	15 Oct 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Diana Bonfim (Supervisor)