Reasons behind the drop in bank profitability in the second half of the previous decade include
I. flattening of the yield curve.
II. increase in competitive pressures on asset pricing.
III. increases in foreclosures in the mortgage market.
IV. increases in net interest margin.

Question

Quizplus · Accepted Answer

Flattening of the yield curve and increased competitive pressures on asset pricing can reduce bank profitability. Increases in foreclosures can also negatively impact profitability. However, increases in net interest margin typically improve profitability, not reduce it.

Reasons Behind the Drop in Bank Profitability in the Second