Analysis of Interest Rate Impact on Commonwealth Bank Profits

Desklib provides past papers and solved assignments. This report analyzes the impact of interest rates on bank profits.

Understanding the relation between Interest rate
and profits of a bank: A case of Commonwealth
Bank

Significance of Research
It is quite understandable that change in interest rate will definitely have an impact
on rate of return on capital. Change in the interest rate is a part of monetary policy.
The main concern is whether profitability of banks gets impacted after changing
the interest rate.
As a management student, it is important to understand the basic of economics in
order to get a better insight for the business operations.
The independent variable is interest rate, whereas the dependent one is net
profits.

Research Questions
How are interest rate and net profits
related?
Does interest rate and net profits of
the banks are related?
Does interest rate always have a
positive impact over net profits?

Source of Raw Secondary Data
The data collection would be done from publicly available documents and
portals. The link is provided below
https://www.ceicdata.com/en/indicator/australia/long-term-interest-rate
For net profit
https://www.commbank.com.au/about-us/investors/annual-reports.html

Searched Terms
• Impact of interest rates on banks profit
• Relationship between interest rate and net profit
• Interest rate and profitability interrelationship
• Interconnection between interest rate and
profitability

Sources for Literature Review
• Rgeç, E., & Arslan, B. (2013). Impact of interest rates on
islamic and conventional banks: the case of
turkey. Applied economics, 45(17), 2381-2388.
• El alaoui, A., Diwandaru, G., Rosly, S., & Masih, M. (2014).
What drives profitability of banks: do interest rate, and fee and
commissions impact the profitability of banks? Evidence from the
european countries. IDEAS working paper series from
repec, IDEAS working paper series from repec, 2014.
• Chaudron, R. (2018). Bank's interest rate risk and profitability in a
prolonged environment of low interest rates. Journal of Banking
and Finance, 89, 94-104.
These three paper can help in
formulating the literature review and
also help in understanding the
relationship between interest rates and
profits