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      Does Monetary Policy Influence the Profitability of Banks in New Zealand?

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      International Journal of Financial Studies
      MDPI AG

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          Abstract

          The study investigates the relationship between monetary policy and bank profitability in New Zealand using the generalized method of moments (GMM) estimator. Our sample comprises 19 banks from New Zealand over the period 2006–2018. Our results suggest that an increase in short-term rate leads to an increase in the profitability of banks, while an increase in long-term interest rates reduces bank profitability. In addition to monetary policy variables, capital adequacy ratio, non-performing loan ratio, and cost to income ratio are also important determinants of the profitability of banks in New Zealand. Capital adequacy ratio has a positive impact on bank profitability, while non-performing loan ratio and cost to income ratio have a negative impact on bank profitability.

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          Initial conditions and moment restrictions in dynamic panel data models

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            Another look at the instrumental variable estimation of error-components models

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              Testing for a unit root in time series regression

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                Author and article information

                Journal
                International Journal of Financial Studies
                IJFS
                MDPI AG
                2227-7072
                June 2020
                June 09 2020
                : 8
                : 2
                : 35
                Article
                10.3390/ijfs8020035
                92ba4512-75e5-428d-9beb-be31f9f88b91
                © 2020

                https://creativecommons.org/licenses/by/4.0/

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