Effect of Global Economic Challenges, Interest Rate Dynamics, and Uncertainty on the Stability and Performance of the Banking System in Ireland
Keywords:
Global economic challenges, Irish banking sector, interest rate risk, uncertainty, financial stability, resilience, small open economy.Abstract
This paper examines how global macroeconomic challenges, interest rate dynamics, and heightened uncertainty affect the stability and performance of the Irish banking system in the current international environment. Drawing on theoretical frameworks and empirical survey evidence, the study investigates how external shocks such as geopolitical tensions, trade disruptions, tariff uncertainty, and global growth slowdowns are transmitted into Ireland’s small, open economy and interact with domestic vulnerabilities to influence banking outcomes. The study uses a structured questionnaire administered to 86 respondents (from a population of 110), comprising bank customers, Small and Medium Enterprise (SME) owners, and bank employees in Ireland. Data were analysed using descriptive statistics and t‑tests with SPSS (version 9.0). The results show that turbulent global conditions and policy uncertainty significantly affect Irish banking stability and profitability, while interest rate variability strongly influences lending activity, household spending, and corporate investment decisions. Although the Irish banking sector currently appears resilient in terms of capital and profitability, it remains exposed to global shocks, trade tensions, and tariff developments, as highlighted in recent stability assessments. Uncertainty undermines consumer confidence and complicates earnings forecasts, yet proactive risk management, portfolio diversification, digital transformation, and close engagement with regulators enhance resilience. The paper concludes that, in an increasingly volatile and geopolitically fragmented global economy, Irish banks must maintain flexible, forward‑looking strategies to safeguard stability and sustain performance.
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