Interest rates and the banking system,
by Philippe Szymczak.
I n the face of macro-economic trends and the changing financial systems in the main Oecd member states, the financial intermediaries have shown different vulnerability and adaptability profiles from country to country and from one category of organization to another.
A simulation model of the profitability of commercial bank intermediation operations was developed to analyse certain aspects of this vulnerability to macro-financial developments in the case of France. Based on the synthetic analysis of bank balance-sheets and profit and loss accounts, this model which the author presents in the first part of the paper can be used, amongst other things, to identify the repricing gap which is at the root of the vulnerability of the French banks' interest margin in the face of decreases in the general level of interest rates. It also shows up certain constraints which are brought to bear on the structure of interest rates.
But this general model can only simulate the mean, overall changes, which cover a whole range of situations differing widely from one individual case or category to another. In order to account for certain aspects of this heterogeneous nature of the French banking system, five models were drawn up to cover different categories. They are presented in the second part of the paper and demonstrate how different types of banking establishment do indeed show differing sensitivity profiles with regard to changing interest rate levels and structures.
Finally, an analysis of debit rates also needs to take into account banking intermediation costs in general. A study of the profitability threshold of intermediation operations was therefore carried out. This approach reveals that commercial banks set debit rates as a mark-up over their costs and sheds some light on certain reasons behind the slow decreare of debit rates in periods of disinflation.
JEL: 312
Interest rates and the banking system, by Philippe Szymczak. I n the face of macro-economic trends and the changing financial systems in the main Oecd member states, the financial intermediaries have shown different vulnerability and adaptability profiles from country to country and from one category of organization to another. A simulation model of the profitability of commercial bank intermediation operations was developed to analyse certain aspects of this vulnerability to macro-financial developments in the case of France. Based on the synthetic analysis of bank balance-sheets and profit and loss accounts, this model which the author presents in the first part of the paper can be used, amongst other things, to identify the repricing gap which is at the root of the vulnerability of the French banks' interest margin in the face of decreases in the general level of interest rates. It also shows up certain constraints which are brought to bear on the structure of interest rates. But this general model can only simulate the mean, overall changes, which cover a whole range of situations differing widely from one individual case or category to another. In order to account for certain aspects of this heterogeneous nature of the French banking system, five models were drawn up to cover different categories. They are presented in the second part of the paper and demonstrate how different types of banking establishment do indeed show differing sensitivity profiles with regard to changing interest rate levels and structures. Finally, an analysis of debit rates also needs to take into account banking intermediation costs in general. A study of the profitability threshold of intermediation operations was therefore carried out. This approach reveals that commercial banks set debit rates as a mark-up over their costs and sheds some light on certain reasons behind the slow decreare of debit rates in periods of disinflation. JEL: 312
