Effects of changing the reserve requirement rate on the return on equity and profit margin of Brazilian banks (2011-2023)

Authors

  • Domingos Joaquim Francisco Universidade Federal de Pelotas (UFPEL)
  • Lucas Souza Beppler Universidade Federal de Pelotas
  • Regis Augusto Ely Universidade Federal de Pelotas (UFPEL)

DOI:

https://doi.org/10.31501/rbee.v24i1.14819

Abstract

This study investigates the effect of an increase in the reserve requirement ratio on the Return on Equity (ROE) and profit margin of large, medium, and small
Brazilian banks. To accomplish this, a database  covering 41 Brazilian banking institutions from 2011 to 2023 is utilized and fixed-effects regressions are estimated. The results of this study show reductions in ROE due to tightening reserve requirement ratios, irrespective of the bank's size. On the other hand, only small banks experience a decrease in their profit margin due to a more restrictive reserve requirement policy.

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Published

2024-11-25

Issue

Vol. 24 No. 1 (2024)

Section

Artigos

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