Seminar
Past
Financial Stability Workshop - How Do High Interest Rates Affect Banks: The Roles of Loan Losses and Macroprudential Policy
Romain Bouis
- Date4 September 2025
- Time 14h00 - 15h30
- Room Salle 5 de l’espace conférence
Abstract
This paper examines empirically how the effect of interest rates on the three components of bank profits – loan loss provisions, net interest margin, and non-interest income – varies depending on bank characteristics and the macroprudential policy environment. A new finding is that higher interest rates lead to larger loan loss provisions for banks offering flexible-rate loans, but that this effect is attenuated when macroprudential borrower-based measures have been tight in preceding years. Tighter macroprudential settings also reduce the effect of higher unemployment on loan loss provisions recorded by banks, and thereby the negative impact of unemployment on profitability. Moreover, we find significant heterogeneity across banks: the profitability of banks with strong risk appetite that extend loans at flexible rates decreases with the interest rate, as the effect of loan losses dominates the effect on interest margin, while the profitability of other banks benefits on average from higher interest rates.
Other seminars
Pre-Trends Ahead of Monetary Policy Surprises: Recovering the Response of Corporate Investment
-
Seminar
-
Séminaire Banque de France
-
Date 13 October 2026
-
Place Online and Room 4 conference space
-
Speaker or organiser Antoine Hubert de Fraisse (London School of Economics)
Details
Past
The Role of Macroeconomic Uncertainty for Endogenous Attention to Central Bank Communication
-
Seminar
-
Séminaire Banque de France
-
Date 6 October 2026
-
Place Online and in Room F148
-
Speaker or organiser Lena Dräger (Leibniz Universität Hannover)
Details
Past
Innovate to Borrow: How Intangibles Shape Finance and Growth
-
Seminar
-
Séminaire Banque de France
-
Date 29 September 2026
-
Place Online and in Room 4 of the congress space
-
Speaker or organiser Victoria Vanasco (CREI)
Details