Can Good Governance Lower Financial Intermediation Costs?

Author/Editor:

Mariusz Jarmuzek ; Tonny Lybek

Publication Date:

December 11, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper argues that better governance practices can reduce the costs, risks and uncertainty of financial intermediation. Our sample covers high-, middle- and low-income countries before and after the global financial crisis (GFC). We find that net interest margins of banks are lower if various governance indicators are better. More cross-border lending also appears conducive to lower intermediation costs, while the level of capital market development is not significant. The GFC seems not to have had a strong impact except via credit risk. Finally, we estimate the size of potential gains from improved governance.

Series:

Working Paper No. 18/279

Subject:

English

Publication Date:

December 11, 2018

ISBN/ISSN:

9781484385678/1018-5941

Stock No:

WPIEA2018279

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

43

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