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S.A.Najafov: Debt rigidity crisis
area countries this figure is about 35%. Taking into consideration record low interest
rate in US and euro area (figure 3 and 4) it is obvious that expected rise in interest
rate will have negative effect on banking sector, because rise of interest rate will
decrease the value of securities banks hold and so will make difficulties for them to
fulfill their obligations towards depositors and other creditors.
Source: Fed; Banking structures report, November 2013, European Central Bank
Figure 2. Share of debt securities in total assets of banking sectors in US (July 2014)
and euro area (2012), percentage of total assets, 2012 sha of debt securities in total
Figure 3. Federal Funds Rate, end of period, %
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