Banking Spreads in Latin America

IMF Working Papers, February 1, 2006

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Banking Spreads in Latin America

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Bibliographic details

• Authors: Gaston Gelos
• Published: February 1, 2006
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451863048.001

Summary and main finding

• Intermediation spreads in Latin America are high by international standards.
• This paper examines the determinants of bank interest margins in that region using bank and country-level data from 85 countries, including 14 Latin American economies.
• The results suggest that Latin America has higher interest rates, less efficient banks, and larger reserve requirements than other regions and that these factors have a significant impact on spreads.
• Latin American countries do not differ markedly from their peers in other aspects that are found important in determining the cost of financial intermediation, such as inflation and bank profit taxation.

Data and scope

• Sample: bank and country-level data from 85 countries, including 14 Latin American economies.
• Publication date: February 1, 2006.
• Author: Gaston Gelos.
• Pages: 31.

Determinants identified

• Higher interest rates in Latin America contribute to larger intermediation spreads.
• Lower bank efficiency (less efficient banks) in Latin America is associated with higher spreads.
• Larger reserve requirements in Latin America have a significant impact on spreads.
• No marked differences found for inflation and bank profit taxation relative to peers.

Subjects and keywords (as given)

• Subjects: Banking, Competition, Deposit rates, Emerging and frontier financial markets, Financial markets, Financial services, Legal support in revenue administration, Monetary policy, Reserve requirements, Revenue administration.
• Keywords: balance-sheet information, bank, bank competition, bank indices, bank spread, Banking spreads, case bank, Competition, concentration ratio, Deposit rates, Emerging and frontier financial markets, financial intermediation, Global, interest margin, interest rate, Latin America's banks' overhead, Legal support in revenue administration, Reserve requirements, WP.

Content in this bundle

• Banking Spreads in Latin America; R. Gaston Gelos; IMF Working Paper 06/44; February 1, 2006
  • Banking Spreads in Latin America; R. Gaston Gelos; IMF Working Paper 06/44; February 1, 2006 (Markdown version)
  • Banking Spreads in Latin America; R. Gaston Gelos; IMF Working Paper 06/44; February 1, 2006 (PDF)