Banking Spreads in Latin America
February 1, 2006
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Summary
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. However, 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.
Subject: 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
Pages:
31
Volume:
2006
DOI:
Issue:
044
Series:
Working Paper No. 2006/044
Stock No:
WPIEA2006044
ISBN:
9781451863048
ISSN:
1018-5941
