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Publication Type
Journal Article
UWI Author(s)
Author, Analytic
Clarke, Ruth ; Logan, Twila-Mae ; Alexander-Smith, Dorothy
Author Affiliation, Ana.
Department of Management Studies
Article Title
Interest rate volatility effects on profitability and solvency: A study of the Jamaican financial sector
Medium Designator
n/a
Connective Phrase
n/a
Journal Title
Social and Economic Studies
Translated Title
n/a
Reprint Status
n/a
Date of Publication
2005
Volume ID
54
Issue ID
2
Page(s)
29-49
Language
n/a
Connective Phrase
n/a
Location/URL
http:; proquest.umi.com/pqdweb?did=976145251&sid=4&Fmt=4&clientId=31897&RQT=309&VName=PQD
ISSN
0037-7651
Notes
n/a
Abstract
This paper examines the role interest rate risk played in the performance of financial institutions during a period of financial crisis in the Jamaican economy in the late 1990s. The economic environment during this period was characterized by highly volatile interest rates, liberalization of the foreign exchange market and deregulation in the banking sector. We examine the changes in net interest margin and the market value of equity of the commercial banks. We find that changes in net interest margin and changes in market interest rates. These results partially explain the severe profitability and solvency problems that the commercial banks experienced in the late 1990s, after the government drastically reduced market interest rates. We also find that bank management moved to alleviate pressure on solvency by adjusting the asset and liability mix but was not able to effect a significantly positive outcome for bank pofitability and solvency.....
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