A1307
Title: The impact of Japan's negative interest rate policy on bank efficiency: A multi-dimensional approach
Authors: Kuan Chieh Chen - National Quemoy University (Taiwan) [presenting]
Abstract: In 2016, Japan implemented a negative interest rate policy (NIRP) to stimulate economic activity amid prolonged deflation and sluggish growth. Although many scholars argue that NIRP exerts adverse effects on banks by compressing interest margins and weakening profitability, the actual impact on domestic banks is reexamined from a multidimensional perspective. Using the stochastic frontier approach, revenue, cost, and profit efficiency are assessed before and after the policy implementation. The results show that while revenue efficiency declined slightly, cost efficiency improved particularly among internet-only banks. To capture the overall operational reality, profit efficiency is further examined and found to have increased, indicating that banks have effectively restructured their business models to sustain profitability despite the challenges posed by unconventional monetary policy.
