Bank business models, negative policy rates, and prudential regulation

Abstract

Using data from Italian banks over the period 2011–2017, we study how negative interest rate policy and prudential regulation impact on bank business models. We report four key findings. First, banks shifted into retail- and market-oriented business models. Second, high- and low-deposit banks reduced loans and increased security/liquid assets; only market-oriented banks expanded lending. Third, interest rate income compression induced by negative rates has been substantial for the Italian banking system as a whole, although retail banks seem to have suffered less. Fourth, non-interest incomes played a compensatory effect. The portfolio reshuffling, as we observed for wholesale and retail banks (less lending and more securities/liquid assets), is related to the goal of reducing risk exposures and, in turn, the connected capital absorption required by prudential regulation.

The Impact of Electronic Data Interchange on Accounting Systems

“…Banks make sure that all financial transactions are completed daily. Banking activities like debit notes, payments, and credits happen daily at any time safely, both on the local and international levels (Savona, 2021). Banking activities run under safe and reliable legislative regulations for any financial data exchange between parties involved (Setyowati, Widayanti, and Supriyanti, 2021, p.181).…”

“…E.D.I. 's ability to respond quickly to feedback from happy clients proves the company has competitive advantages over its users (Savona, 2021). Close ties between parties Organizations that adopted Electronic Data Interchange sage are influenced by the inability to control consumer retailer initiation transactions and the lack of disturbing data.…”