Interest Rates Of Commercial Banks Research Articles

Does Monetary Policy Influence Non-performing Loans of Listed Commercial Banks in Kenya?

The Kenya banking sector plays a crucial role in Kenya’s economy despite the prevailing macroeconomic headwinds in the Country. The Banking Sector Industry Report of 2023 indicated that the banking sector contributed to 66% of gross domestic product as of December 2022. The high levels of non-performing loans remain a concern in the Kenya banking sector. The study sought to assess the influence of monetary policy on non-performing loans in the banking sector in Kenya. The target population is all listed commercial banks in Kenya. Using monthly secondary data from November 2019 to September 2023 obtained from the Central Bank of Kenya, the study utilized a multiple regression model to estimate the influence of monetary policy on the percentage growth of nonperforming loans of listed commercial banks in Kenya. Findings pointed out that Repo rates and Treasury bill rates do not influence non-performing loans of listed commercial banks in Kenya as measured by the gross non-performing loans ratio as exhibited by the P-values of 0.327866 and 0.577173 respectively, which is greater than 0.05. The results also implied that the central bank rate and interbank rates do influence non-performing loans of listed commercial banks in Kenya as measured by the gross non-performing loans ratio as illustrated by the P-values of 0.028844 and 0.00018 respectively, which is less than 0.05. According to the findings, the study recommends that policymakers should prioritize creating a strong financial ecosystem so that monetary policy can be utilized to regulate commercial bank interest rates. This will, in effect, serve to decrease the expansion of non-performing loans, reduce risk and entice competitors into the financial sector, enhance the capital base, increase lending to promote feasible projects, and, as a result, stimulate the country's growth.

Determinants of Lending Interest Rate of Nepalese Commercial Banks

This research analyzes the determinants of lending interest rates of commercial banks in Nepal. The lending interest is the main source of income for any financial institution. Secondary data has been collected from the annual reports of seven commercial banks for the study. Using convenience sampling techniques only seven banks are taken as samples out of 21 commercial banks in Nepal. 35 observations of the study are analyzed and interpreted using correlation and simple regression analysis. The study is based on the dependent variable lending interest rate and independent variables: liquidity ratio, deposit interest rate, return on assets, default risk, gross domestic production, and inflation. This study found a statistically positive and significant effect of deposit interest rate, return on assets, and inflation on the lending interest rate of commercial banks in Nepal.

INTEREST RATE PASS-THROUGH IN UKRAINE: EVIDENCE FROM THE BANK OWNERSHIP

A full-scale war started by russian federation on February 24th, 2022 disrupted the classic monetary policy Ukraine has been conducting for years. Nevertheless, it remains critical to preserve price stability. In June 2022, NBU significantly increased its key policy rate aiming to decrease inflationary pressure through higher market interest rates. Hence, the Central bank still relies on the interest rate transmission mechanism despite the war. This research is focused on the transmission of the key policy rate changes to the commercial bank interest rates depending on the banking sector structure. We believe that this research is useful not only for the west academia but policymakers since it helps to assess monetary policy efficiency. We tested the transmission of changes in key policy rates on new loans’ and deposits’ interest rates of different maturities and groups of banks based on banks’ ownership that in the case of Ukraine closely connected to the bank's efficiency. We applied autoregressive distributed lag models with error correction forms. Our research confirms that interest rate pass-through from the key policy rate to the bank interest rates differs for banking groups. Less effective banks have more powerful transmission to their new deposits interest rates and weaker to new loans interest rates, therefore, exposed to interest risk. Moreover, according to our results, interest rate pass-through is weaker with higher maturity among both deposits and loans.

Forecasting Lending Interest Rates of Commercial Banks in Cameroon with Autoregressive Integrated Moving Average (ARIMA) Model.

Purpose: Lending Interest rate prediction is one of the most relevant aspects in the banking sector and a country’s economy. Lending is an important variable within this sector since economic and market conditions vary over time. Efficient methods are needed to describe the trends and characteristics of lending interest rate. The performance of different time series models for analysis of lending interest rates of commercial banks in Cameroon is provided to determine the feasibility of method for the generation of results in the wake of economic decisions.
 Methodology: Historical time series of lending interest rates in the banking sector in Cameroon were analysed for the period 1972 to 2023. The Box-Jenkins methodology was used to analyse the time Series data.
 Findings: It was revealed that 76.75% of the variation in Lending interest rates in Cameroon is accounted for by the lending interest rates for the past 52 years, the inflation rate for the past 52 years and the GDP for the last 52 years. Therefore, an increase in lending interest rates 52 years ago by one unit will increase lending interest rates today by 0.808 units. Similarly, an in increase in inflation by one unit will reduce lending interest rates by 0.002 units. In addition, an increase in GDP by one unit will reduce lending interest rates by 0.000001 unit. The ARIMAX (1,1,4) demonstrated to be more robust. Therefore, lending interest rates in Cameroon will reduce with time as from the year 2023 to 2027 and above. Investors are encouraged to borrow from the banks and invest within this time frame.
 Unique Contribution to Theory Practice and Policy: Long and varying lags of interest rates separate the effects of monetary policy from the economy and has caused a lot of unemployment in any society. The degree to which interest rates rise has pulled down the economy is alarming. This can be seen in businesses, economic projections, and spending. More businesses report that interest rates have reduced their capital and non-capital spending expectations compared to 2022. A further indication that the impact of higher interest rates has yet to be fully felt is evidence that keeping the existing policy course will limit the spending activity of more enterprises. Monetary policy has surpassed all other concerns for finance executives in the past quarter. Survey participants mentioned interest rates in their decision to cut spending. The study provides a unique way of comparing results of interest rates using a traditional time series model to a typical Interest rate model.BEAC should chose an accommodating monetary policy centred on decreasing the already high interest rate and injecting cash into CEMAC savings in response to the economic shock currently existing in Cameroon.

SOME CHALLENGES TO FINANCIAL STABILITY DURING THE ECONOMIC DOWNTURN

Financial stability issues, arising during the COVID-19 pandemic and the ongoing conflict in Ukraine, have affected the problems of financial market instability: interest rates of commercial banks started to rise, inflation increased, affecting consumer solvency issues, the need for bank financing and investment opportunities decreased, part of the staff was lost, labour supply decreased, productivity declined due to emerging economic stabilisation problems. Financial stability cannot be achieved without effective operation of the financial system, which is explored in this article, based on the evaluation models of financial stability. These models illustrate the integral relationship between the impact of individual factors and the effects on the interest rates of commercial institutions, the impact of interest rates on household financing, and the assessment of the interaction between interest rates and inflation. The assessment of financial stability takes into account the performance, liquidity, solvency, and evaluation of adverse conditions of banks as financial institutions.

Does Rocky Mountain Credit Union Competition still Affect Commercial Bank Interest Rates?

<p class="MsoNormal" style="margin-top: 12.0pt;"><span lang="EN-US" style="mso-bidi-font-size: 10.5pt; font-family: 'Cambria',serif; mso-fareast-font-family: 宋体; mso-bidi-font-family: 'Times New Roman';">Historically, increased credit union competition in Idaho and Montana has caused commercial banks to offer higher deposit rates to savers and lower loan rates to borrowers. Data are collected for the second quarter of 2018 to examine whether that pattern still holds true. Unlike prior studies, empirical results indicate that credit union competition no longer exerts statistically reliable impacts on deposit rates or loan rates in this northern Rocky Mountain region of the United States. Potential contributing factors include bank and thrift consolidation in recent years, the low interest rate environment prevailing during the late 2010s, and greater emphasis on non-interest forms of intermediary competition in the banking markets that comprise this regional economy.</span></p>

DISCOUNT RATE AS A MEASURE OF MONETARY POLICY FOR MARKET STABILIZATION - EXAMPLE OF THE NATIONAL BANK OF SERBIA

The increase in interest rate is related to the efforts of monetary authorities to neutralize inflationary pressures; while the rate reduction can be interpreted as an invitation to business sector to access more favorable lending conditions. The effectiveness of these changes largely depends on the development level of financial system, the role of the central bank as a creditor and current economic situation. In this research an econometric regression double-logarithmic model was applied, with the main goal of examining the relationship between discount rate and its influence on interest rates and money supply on the example of the National Bank of Serbia. The results show the correlation between the NBS discount rate and interest rates of commercial banks and the amount of money in circulation, indicating their influence on market stability.

The economic climate for businesses and the continued existence of industrial companies in Nigeria

The primary goal of this study was to determine if and how the Nigerian business climate affects the long-term viability of manufacturing companies there. A theoretical or qualitative method was used to compile the study's findings. The study found that high rates of unemployment, interest, the exchange rate, and inflation all have negative and substantial effects on the long-term viability of Nigeria's manufacturing sector. Manufacturing firms in Nigeria should be encouraged by the government to increase the number of available jobs for the country's recent graduate population by providing financial incentives in the form of grants and realistic loan facilities from the central bank of Nigeria (CBN) and the bank of industry (BOI). Scan the external economic environment for the country's strengths and weaknesses and ensure the survival of manufacturing enterprises by having the government aid lower and regulate the quick acceleration of interest rates of commercial banks through the proper financial authorities.

Influence of News Tonality on Credit Market during Sanctions Period

Russian economy was influenced by western sanctions in many spheres. Russian credit market was significantly impacted as well. The presented work suggests that except for the strict influence in form of financial restrictions and assets freezing, sanctions also had indirect impact. Emotional presentation of Russian sanctions in abroad media can be claimed as one of the indirect factors, which form banking management expectations of economic situation and influences people to have loans and place money into deposits. The aim of research is to estimate the influence of news about Russian sanctions tonality in foreign media on the level of credit and deposit interest rates in Russian commercial banks. To achieve this goal, the following hypotheses were claimed: there is a connection between the way in which sanctions against Russia are presented in foreign media and the level of interest rates; there is a difference in the impact of positive and negative news texts on the expectations, determining changes in interest rates. «Bag of words» technique and a special dictionary, which helps to identify the emotional tonality of the text, were used to achieve the declared aim. Advanced modeling of interest rates was carried out using the vector autoregression (VAR) model, supplemented by the construction of the impulse response function and the calculation of the rate dispersion decomposition. As a result, a hypothesis about the influence of news tonality on commercial bank interest rates’ was approved.

STUDI KELAYAKAN BISNIS USAHA JASA DESAIN GRAFIS DAN DIGITAL PRINTING PADA GEDE PROJECT DESIGN

In the current era of globalization, as time goes by, technology will become more sophisticated, the role of graphic design in all business fields is needed. This can be proven by the number of business fields that utilize the expertise of graphic designers. The need for promotional design which is now increasingly prevalent in the business world, making graphic design is required to be able to develop itself in making a product that can attract public interest.This research was conducted with the aim of knowing the feasibility of the Gede Project Design Industry in terms of market aspects, technical aspects, and management and human resources aspects using qualitative descriptive methods, while financial financial aspects were analyzed using quantitative descriptive methods with manual systems through the help of the Microsoft Excel program.The analysis results obtained from market aspects, technical aspects, as well as aspects of management and human resources, the Gede Project Design industry is still categorized as still feasible to run, but there are several things that need to be evaluated and improved in marketing strategies related to promotional activities that still rely on the door to door strategy. word of mouth so that the absorbed market share is still not according to the desired target, then the problem with company management does not have a permanent workforce. Meanwhile, the analysis of the financial aspects shows that the Gede Project Design industry is feasible to run. This can be seen from the NPV (Net Present Value) obtained 0 and a positive value of IDR 28,164,030. The resulting IRR (Internal Rate Of Return) value the commercial bank interest rate of 12.88%. The resulting payback period from the investment age of 2.5 years. The Profability Index (PI) obtained is 1 which is 1.78.

КОММЕРЦИЯЛЫҚ БАНКТЕРДІҢ ПАЙЫЗДЫҚ САЯСАТЫНА ӘСЕР ЕТЕТІН ФАКТОРЛАР

The subject of the flock is conditioned by the need to consider the influence of internal and external factors on the interest rates of banks. The purpose of the study is a comprehensive, reliable study of the main factors influencing the formation of interest rates on the basis of methods of cognition developed in science, as well as obtaining and implementing recommendations of results and conclusions. The choice of the direction of scientific research is related to the need to compile an idea of the features and methods of forming the interest policy of the bank. The research used the method of analysis, synthesis, observation and collection of factual information that allowed studying economic phenomena both in parts (analysis) and in general (synthesis).The article examines the factors influencing the interest rates of commercial banks, which depend primar-ily on the macroeconomic situation in the country.

Investigating the determinants of commercial bank interest rate spreads in Lesotho: Evidence from autoregressive distributed lag (ARDL)andnon‐linear ARDLapproaches

AbstractThis article investigates the determinants of commercial bank interest rate spreads in Lesotho using monthly time series data from January 2009 to December 2018. The Autoregressive Distributed Lag (ARDL) bounds testing approach is used to measure long‐run co‐integration while the non‐linear ARDL (NARDL) model is used to test validity of long‐run symmetric effects. The bounds tests revealed existence of long‐run co‐integration between the study variables. Inflation and the Treasury bill rate have a positive and statistically significant impact on interest margins while the deposit rate has a negative and significant effect. The pass‐through of inflation and the deposit rate to interest margins is less than one, respectively. This confirms that inflation affects banks' lending rates with a second round effect while deposit liabilities are not the only source of credit financing for banks. The null hypothesis of long‐run symmetry is rejected for Treasury bill rates. Authorities are advised to ensure price and general macroeconomic stability while also pursuing policies aimed at maximizing savings.

Influences of Monetary Policy Instruments on Domestic Investments and Economic Growth of Nigeria: 1970-2018

This study tagged influence of monetary indicators on domestic investments and growth of Nigerian economy: 1970-2018, main aim is to ascertain the degree of effects of monetary variables on domestic investment and economic growth. Annual data on the following variables: private domestic investment (PDI), economic growth rate (EGR), narrow money supply (NMS), Commercial bank credit to private Investors (CCP), Commercial bank interest rate (CLR), naira-dollar ratio (NDR) and inflation rate (INR) were extracted from diverse sources. ADF and PP approach as well as ARDL Model were employed for the study. Generally, findings revealed that PDI is influenced positively and significantly at 5% LOS by one period log of PDI and CCP in Nigeria within 1970 and 2018. Also, NMS impacted negatively on domestic investments. It implies that available narrow money supply was utilized majorly by the government sector of the economy with little investment money left for private investors. Results further indicated, that monetary indicators such as NDR, CLR and EGR had no significant influence on domestic investments in the study period. Other findings showed that PDI, NMS and NDR were significant to explained EGR in this period of study. Lagged EGR variable appeared insignificant. Given the results and analysis made, conclusion is drawn that key monetary variables which explained PDI and EGR are mainly money supply and Commercial bank credit. It is therefore recommended that monetary policy moves that would ensure availability of more money and credit to private investors are vigorously pursued.

Assessing the Impact of Interest Rate on Foreign Exchange Rate in Ghana

Foreign exchange rates determine the strength of a nation’s currency against other nation’s currency. Determination of foreign exchange rates in Ghana is therefore, of immense importance since the livelihood of many people in the country is tied to the performance of the local currency against the foreign currencies. Data from books and journals were used as the basis for the research; the research result was then compared to the work of earlier writers to ascertain the conformity or otherwise of the Ghanaian situation. The research involved comparing the percentage changes in interest rates of commercial banks in Ghana to the percentage changes in exchange rates for the period 2008 to 2018 to ascertain the relationship between the two variables. Quantitative research design was used for the work. The researcher determined the mean and standard deviation of the distribution and computed the coefficient of correlation for the variables and in addition the regression analysis. The coefficient of correlation was -0.5 and the gradient of the regression line was also -.05. The research showed that interest rates were strongly negatively related to the exchange rates in Ghana for the period 2008 to 2018. This explained why exchange rates in Ghana kept falling while interest rates rose continuously which is contrary to postulates that indicate, a rise in interest rates results in rise in exchange rates. The researcher noted that the great disparity between the lending rate and deposit rate in Ghana is a contributing factor to this anomaly.

Do Commercial Banks Incorporate the Environmental Risk in Loan Pricing Decision? Evidence from the Environmental Responsibility Score

With the rapid development of China’s economy, the problem of environmental pollution is becoming increasingly serious, and has become one of the important issues of China’s economic construction at present and in the future. The Chinese government has adopted many measures to solve environmental problems, including a series of financial policies. Since bank credit is the most important financing source for Chinese enterprises, the existing financial policies are mainly made around bank loans. If only from the aspect of scale, the green credit of China’s commercial banks has made greatly impressive achievements. However, there is no clear answer to questions such as whether commercial banks can effectively identify, measure, monitor and control the environmental risk in credit business activities”. Under the continuous promotion of the regulatory authorities, have China’s commercial banks taken into account the environmental risk of borrowing enterprises when pricing loans? This paper collects 8677 loan data of commercial banks of China’s 1127 listed companies from 2010 to 2015, and empirically tests the impact of environmental responsibility on loan interest rates based on the environmental responsibility score of listed companies provided by Hexun. We find that there is a negative impact of the environmental responsibility score on loan interest rates, yet this impact varies with the interpretation difference of commercial banks on the environmental responsibility score. On the one hand, for those banks with advantages in the access to proprietary information, the environmental responsibility score provides limited incremental information and thus has a weaker impact on their loan interest rates than other banks’. On the other hand, commercial banks have higher expectations on the environmental responsibility of listed companies in industries with heavy environmental pollution, which weakens the impact of the environmental responsibility score on loan interest rates. After controlling the effects of endogenous model, sample bias and alternative interpretation, the conclusions are still valid. The contributions of this paper are as follows: (1) It uses a large amount of loan data to analyze the impact of environmental responsibility on loan interest rates from the perspective of commercial banks, and examines the possible impact of the interpretation difference of commercial banks on the above relationship,which makes up for the deficiency of existing studies. (2) It not only focuses on the impact of environmental responsibility on loan interest rates, but also examines the possible impact of other social responsibility, further enriching the research on the relationship between corporate social responsibilities and financing costs. (3) It demonstrates that in the context of building an ecological civilized society and strengthening environmental protection regulation, the environmental risk is also an important factor affecting the loan interest rates of China’s commercial banks, enriching the literature related to loan pricing decision of China’s commercial banks. Based on the loan data of listed companies, this paper empirically studies the impact of the environmental responsibility score on the loan interest rates of commercial banks. It has some implications for policy-makers and analysts. Firstly, listed companies should further perfect their disclosure of environmental responsibility and improve the quality of information, so as to reduce the information asymmetry between listed companies and commercial banks, and then cut down the cost of loans. Secondly, listed companies should pay attention to their environmental responsibility, increase investment in environmental responsibility, improve the level of environmental responsibility management, and scientifically understand the relationship between environmental responsibility and financing costs.

Quantitative Easing In Accelerating the Economic Growth Rate – Indian Perspective

The present situation of Indian economy is worse. The GDP growth rate is 5% which is very low compared to last five years trend. After a record fell down of short-term interest rates of commercial banks (below one percent), the Reserve bank of India has turned to quantitative easing (QE) to hold up economic growth. It is used by the government to amplify the supply of money in the economy. It leads to an increase in lending by commercial banks and spending by customers subsequently. On the other hand, these policies will boomerang greatly on economy and leads to extraordinarily high levels of inflation. If commercial banks fail to afford excess reserves, it may direct to unhinge in the money market. Simply it jeopardizes the entire economic system. To come out from this, Reserve Bank of India injects a fixed quantity of money into the economy by massive and unprecedented purchasing of financial assets from commercial banks and private entities. This leads to an increase in banks reserves. Quantitative easing is not a new word to the economic world; it is most popular from the times of great recession in US economy. There has been an explode of research on QE and its effects. Past studies tremendously agree that QE helps in ease financial conditions and there is no reason to doubt that it supports economic growth. It is not only very powerful in times of financial crisis, but also has a momentous effect in normal times. By and large, this research paper focuses on finding the reasons behind the slowdown of growth rate of Indian economy and provides the likely solutions to come out from the crisis.

Duration gap analysis revisited method in order to improve risk management: the case of Chinese commercial bank interest rate risks after interest rate liberalization

Modern theories attach much attention to interest rate-related problems. We discuss the impacts of the interest rate liberalization, in China, for ten commercial banks of three markedly different ownership types. The methodology is based on revisited interest rate sensitivity analysis, duration analysis and value-at-risk analysis. The situation is examined within both vertical (composition of operating income and interest rate sensitivity gap for the ten banks in the same year) and horizontal (one bank over a 7-year period) aspects. Thereafter, we discuss the present management of interest rate risks by such banks. We conclude with several suggestions on how such commercial banks risk management can be refocused and on how their cases can be used for comforting other banking cases.

Relevance of Quantitative Easing Model to Heal the Sick Indian Economy

The present situation of Indian economy is worse. The GDP growth rate is 5% which is very low compared to last five years trend. After a record fell down of short-term interest rates of commercial banks (below one percent), the Reserve bank of India has turned to quantitative easing (QE) to hold up economic growth. It is used by the government to amplify the supply of money in the economy. It leads to an increase in lending by commercial banks and spending by customers subsequently. On the other hand, these policies will boomerang greatly on economy and leads to extraordinarily high levels of inflation. If commercial banks fail to afford excess reserves, it may direct to unhinge in the money market. Simply it jeopardizes the entire economic system. To come out from this, Reserve Bank of India injects a fixed quantity of money into the economy by massive and unprecedented purchasing of financial assets from commercial banks and private entities. This leads to an increase in banks reserves. Quantitative easing is not a new word to the economic world; it is most popular from the times of great recession in US economy. There has been an explode of research on QE and its effects. Past studies tremendously agree that QE helps in ease financial conditions and there is no reason to doubt that it supports economic growth. It is not only very powerful in times of financial crisis, but also has a momentous effect in normal times. By and large, this research paper focuses on finding the reasons behind the slowdown of growth rate of Indian economy and provides the likely solutions to come out from the crisis.

Effects of Lending Relationship on the Interest Rates of Commercial Banks in Cameroon

Borrowing is the main stream through which small and medium size enterprises obtain funds for investment in Cameroon, and interest rate is a key determinant of how much funds these firms can acquire. It is against this backdrop that this study investigates the effects of lending relationship on the interest rate of commercial banks. Specifically, this study examines the effects of lending relationship factors like duration, pre-existence and trust and firm characteristics such as age, size, incorporation form and the gender of bank borrowers on the lending interest rates of commercial banks. A total of 119 questionnaires were administered to 9 commercial banks and their borrowers in Fako Division, South West Region of Cameroon and the ordered logistic regression method was employed as the analytical technique. Findings showed that trust in a relationship, preexisting relationship, firm size and incorporation form and gender of bank borrower significantly affect lending interest rate while duration of the relationship and firm age had insignificant effects. It was recommended that commercial banks should consider using relational social control measures.

Анализ влияния процентной политики Банка России на инфляцию и динамику процентных ставок коммерческих банков

Анализ влияния процентной политики Банка России на инфляцию и динамику процентных ставок коммерческих банков