The impact of non-traditional activities on banks’ efficiency in a low interest rates environment

Abstract

This paper assesses the potential growth of non-traditional production in commercial banks in the Eurozone during the 2015–2019 period characterized by excessively low interest rates. Using Data Envelopment Analysis, the study evaluates the production plans of 63 European commercial banks under European banking supervision. Results indicate that non-traditional banking activities experienced substantial growth from 2017 onward, accompanied by a reduction in inefficiency, suggesting that banks adapted to the low interest rate environment.