ABSTRACT
In this study, the level of interest burden maximizing bank profits and tax revenues was assessed separately for lockdown and non-lockdown periods by using polynomial regression. According to the findings of the study, the interest burden that provides the maximum level of bank profitability for the non-lockdown period was estimated at 2.9%, and 2.0% for the lockdown period. But the interest burden that provides the maximum level of tax revenue for the non-lockdown period was estimated at 1.48%, and 1.63% for the lockdown period in Azerbaijan. Besides that, the interest burden that provides the minimum level of tax revenue for the non-lockdown period was found at 2.16%, and 1.87% for the lockdown period. In order to ensure fiscal and monetary compatibility, it is important to consider the difference between these interest burdens as far as possible within the framework of optimality.

Key Words: Interest burden, profit of banking sector, polynomial regression, optimality, tax revenue

JEL Classification: B23, C13, E58, E62, G21