Determinants of Credit Growth and Interest Margins in the Philippines and Asia

Author/Editor: Tatum Blaise Pua Tan
Publication Date: May 01, 2012
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Despite robust deposit growth, credit growth has been sluggish in the Philippines. We attribute this to legacy weaknesses in bank balance sheets, consumption-led economic growth, and relatively high net interest margins. Bank-level analysis suggests that interest margins in the Philippines rise with bank size, bank capitalization, foreign ownership, overhead costs and tax rates. Using bank-level data for a number of Asian economies, we find that higher growth, lower inflation, higher reserve requirements, greater banking sector development, smaller stock market development and lower government deficits reduce net interest margins, informing the policy debate on strengthening financial intermediation in the Philippines.
Series: Working Paper No. 12/123
Subject(s): Asia | Banking sector | Credit demand | Credit expansion | Interest rates

Author's Keyword(s): Credit growth | net interest margins | Philippines | Asia
Publication Date: May 01, 2012
ISBN/ISSN: 9781475503524/1018-5941 Format: Paper
Stock No: WPIEA2012123 Pages: 25
US$18.00 (Academic Rate:
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