Determinants of Bank Interest Margins in the Caucasus and Central Asia
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Summary:
In this paper, we use a bank-level panel dataset to investigate the determinants of bank interest margins in the Caucasus and Central Asia (CCA) over the period 1998–2013. We apply the dealership model of Ho and Saunders (1981) and its extensions to assess the extent to which high spreads of banks in the CCA can be related to bank-specific variables, to competition, and to macroeconomic factors. We find that interest spreads are affected by operating cost, credit risk, liquidity risk, bank size, bank diversification, banking sector competition, and macroeconomic policies; but the impact depends on the country.
Series:
Working Paper No. 2015/087
Subject:
Banking Central bank policy rate Credit risk Loans Market risk
English
Publication Date:
April 29, 2015
ISBN/ISSN:
9781484342817/1018-5941
Stock No:
WPIEA2015087
Pages:
29
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