Determinants of Bank Interest Margins in the Caucasus and Central Asia
April 29, 2015
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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.
Subject: Banking, Central bank policy rate, Credit risk, Loans, Market risk
Keywords: bank, interest, interest margin, WP
Pages:
29
Volume:
2015
DOI:
Issue:
087
Series:
Working Paper No. 2015/087
Stock No:
WPIEA2015087
ISBN:
9781484342817
ISSN:
1018-5941
