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Loan Product Policy and Rentability Based on Interest Rates in Czech Republic

Author

Listed:
  • Eva Cipovová
  • Petra Jílková

Abstract

The Czech banking system is an innovation market driven by the power of new low-cost banks focused on young internet clients. We could say that it is profitable and one the most stable market in Eastern Europe.The purpose of this article is to analyse the effect of the interest rates on the loan product policy of selected banks in the Czech Republic, specifically in connection with the banking products offered to the SME segment.In particular, the final report focusses on measuring bank profitability based on interest rates on different products within a specific time period.Final touch of this article is complemented by a calculation of the additional ROE for the commercial bank using model based on itnerest margin and profitability of provided loans.We found out that the usage of different approaches of internal models with different combinations of key determinants can potentially increase the bank's profitability in the interval from 1,042 mil. to 24,300 mil. CZK.

Suggested Citation

  • Eva Cipovová & Petra Jílková, 2018. "Loan Product Policy and Rentability Based on Interest Rates in Czech Republic," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 575-585.
    • Handle: RePEc:ers:journl:v:xxi:y:2018:i:2:p:575-585
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    File URL: https://www.ersj.eu/dmdocuments/44.CEPINOVA_ET_AL_XXI_2_18.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Banking; marketing innovations; financial market; small and medium-sized enterprise. JEL Code: G21; G23; O16.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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