Paraguay: Selected Issues

February 21, 2014

Preview Citation

Format: Chicago

Paraguay: Selected Issues, (USA: International Monetary Fund, 2014) accessed September 19, 2024

Also available in: español

Summary

This Selected Issues paper analyses Paraguay’s effective interest spreads using various methodologies. Interest rate spreads in Paraguay continue to be some of the highest in Latin America. A series of bank crises in the late 1990s and early 2000s weakened the financial system and pushed up spreads. The analysis suggests that operational costs, rising profits, and the need to cover credit and liquidity risks are the main factors behind Paraguay’s effective spreads. Improving data quality and mechanisms for sharing credit information could contribute to reduced spreads. Although the empirical results suggested that banking concentration has not given rise to greater spreads, adding new banking entrants may lower margins by increasing competition within the sector.

Subject: Banking, Commercial banks, Credit, Credit risk, Deposit insurance, Dollarization, Financial institutions, Financial regulation and supervision, Foreign banks, Monetary policy, Money

Keywords: Bank concentration ratio, Banks market power, Commercial banks, CR, Credit, Credit risk, Dollarization, Dollarization in Paraguay, Exchange rate, Exchange rate pass-through, Foreign banks, Interest rate margin, Investment activity, ISCR, Macroeconomic effect, Paraguay, Paraguayan bank, Ratios in Paraguay, Roes ratio, South America, Transmission mechanism

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2014/061
Stock No:

1PRYEA2014002
ISBN:

9781475513745
ISSN:

1934-7685

Notes

Also Available in Spanish

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