Can Good Governance Lower Financial Intermediation Costs?

December 11, 2018

Preview Citation

Format: Chicago

Mariusz Jarmuzek, and Tonny Lybek. Can Good Governance Lower Financial Intermediation Costs?, (USA: International Monetary Fund, 2018) accessed September 19, 2024

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.

Subject: Bank credit, Banking, Capital markets, Competition, Credit risk, Financial crises, Financial markets, Financial regulation and supervision, Global financial crisis of 2008-2009, Inflation, Prices

Keywords: Bank characteristic, Bank-dealership framework, Bank-dealership model, Banks capital, Capital markets, Competition, Corruption, Credit risk, Financial intermediation costs, Global, Global financial crisis of 2008-2009, Governance, Inflation, Intermediation cost, Transaction size, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/279
Stock No:

WPIEA2018279
ISBN:

9781484385678
ISSN:

1018-5941

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