Can Good Governance Lower Financial Intermediation Costs?
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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. 2018/279
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
English
Publication Date:
December 11, 2018
ISBN/ISSN:
9781484385678/1018-5941
Stock No:
WPIEA2018279
Pages:
43
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