How Interest Rates Impact Banks’ Bottom Line: A Look at HistoryVW Staff
Interest rates play a vital role in how a bank makes money—both directly (i.e. driving loan, securities and deposit pricing and borrowing costs) and indirectly (i.e. impacting loan demand, default rates, and capital markets activity). Over the past 30 years, interest rates have been in a secular decline since peaking in 1981 (with the 10-year Treasury yield currently at around 2.15 percent vs. nearly 14 percent in 1981). For much of this period (until more recently), banks have . . .
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