The Effect of Interest Rate Fluctuations on Profitability of Domestic Banks

• Main Authors: suyenlee, 呂素彥
• Other Authors: 梁榮輝
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/78959295680401194092

碩士 === 佛光大學 === 經濟學系 === 95 === Abstract This thesis it to explore impacts to domestic bank’s income, expenditure and profit-making resulted from market interest fluctuation, and further explain on bank’s reaction with protecting long term profits by sacrificing short term gain, or any reversed formation in assets and liabilities, in addition to adjusting speed of reaction to proper ratios of assets and liabilities for individual bank. From this perspective, this thesis is to examine whether interest fluctuation can affect risk factors pertinent to bank’s continual operations. This thesis uses samples taken from 41 domestic banks. The duration under study starts from 1998 to 2006. And balance sheet of assets and liabilities, income statement, etc, of quarterly financial reports from individual bank shall be judicially adopted. This thesis is based upon partially adjusted Flannery Model, responded separately with sales income, expenditure and profit. By analyzing with regression technique, and this thesis can observe interactive relationship among variables through regression parameter t, and determine whether this relationship is notable in nature. Then, it further explores impacts onto sales income, expenditure and net gain on observed banks from the interest fluctuation perspective. The empirical study is as follows ： 1. The result is different from that of previous studied literatures. Structure of asset and liability for domestic bank registers prevalent phenomenon of short lending and long loaning. Only ten out of forty one banks fit in to situation of long lending and short loaning. And no special discrepancies of asset’s size and magnitude between banks are noted. Nonetheless,majority of all sizes and magnitudes belong to situations of short lending and long loaning. 2. Most of the interest fluctuation in regards to sales income and expenditure, register statistical notability, but none of such is observed in regards to sales profit . 3. From relative perspective on impacts resulted from interest fluctuation, the domestic bank’s allocation on asset and liability shows that liability is much more sensitive than asset in regards to interest fluctuation. As for change in trending direction, interest factor shows the same as that of the previous two. And the speed for asset adjustment within domestic bank is far slower than that for liability.