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Interest Rate Policy, Asset Value, and the National Bank of Poland's Financial Outcomes

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Listed:
  • Piotr Misztal
  • Arkadiusz Durasiewicz
  • Ewa Falkiewicz
  • Ewelina Markowska
  • Magdalena Pazdzior

Abstract

Purpose: This study examines the impact of interest rate changes on the asset value of the National Bank of Poland (NBP) from 2015 to 2023, considering the broader financial outcomes of the Central bank. Design/Methodology/Approach: The research employs statistical and econometric techniques, including the vector autoregression (VAR) model and the Granger causality test. It also utilizes literature reviews in banking and finance. Data sources include the National Bank of Poland's financial reports and quarterly data from the Bank for International Settlements. Findings: The study finds that while changes in NBP interest rates correlate with shifts in the bank’s asset value relative to GDP, the impact is relatively weak (correlation coefficient of 0.31). The Granger causality test suggests that other economic and non-economic factors significantly influence asset value changes. The NBP's financial performance fluctuated over the analyzed period, with losses occurring in years of rising interest rates due to increased costs on reserves and money bills. Practical Implications: The findings highlight the challenges Central banks face in maintaining financial stability while implementing monetary policy. The study underscores the importance of Central bank capital management and the potential need for government intervention in extreme loss scenarios. Originality/Value: This research contributes to the ongoing discourse on Central bank financial stability by analyzing the unique case of the National Bank of Poland. It offers empirical insights into the effects of interest rate policy on Central bank assets and financial performance, with broader implications for Central bank independence and monetary policy effectiveness.

Suggested Citation

  • Piotr Misztal & Arkadiusz Durasiewicz & Ewa Falkiewicz & Ewelina Markowska & Magdalena Pazdzior, 2025. "Interest Rate Policy, Asset Value, and the National Bank of Poland's Financial Outcomes," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 723-738.
    • Handle: RePEc:ers:journl:v:xxviii:y:2025:i:1:p:723-738
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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