Bank Efficiency and Market Structure: What Determines Banking Spreads in Armenia?
IMF Working Papers, June 1, 2007
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Bibliographic details
- Authors: Holger Floerkemeier, Era Dabla-Norris
- Published: June 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451866988.001
Summary and main findings
- Despite far-reaching banking sector reforms and a prolonged period of macroeconomic stability and strong economic growth, financial intermediation in Armenia has lagged behind other transition countries, and interest rate spreads have remained higher than in most Central and Eastern European transition countries.
- The paper examines the determinants of interest rate spreads and margins in Armenia using a bank-level panel dataset for the period 2002 to 2006.
- Bank-specific factors explain a large proportion of cross-bank, cross-time variation in spreads and margins:
- Bank size
- Liquidity
- Market power
- Market structure within which banks operate also explains a large proportion of variation in spreads and margins.
- The results suggest that there is a large potential to increase cost efficiency and competition in the banking system.
Data and methodology
- Empirical approach: analysis based on a bank-level panel dataset.
- Sample period: 2002 to 2006.
Policy implications and recommendations
- Increase cost efficiency in the banking system to help reduce interest rate spreads.
- Strengthen competition in the banking system to lower margins and improve financial intermediation.
Publication and metadata
- Authors: Holger Floerkemeier; Era Dabla-Norris
- Publication date: June 1, 2007
- Series: Working Paper No. 2007/134
- Issue: 134
- Volume: 2007
- Pages: 28
- DOI: https://doi.org/10.5089/9781451866988.001
- Stock No: WPIEA2007134
- ISBN: 9781451866988
- ISSN: 1018-5941
IMF Working Paper: "Bank Efficiency and Market Structure: What Determines Banking Spreads in Armenia?"