978-3-330-35135-6

Determinants of Interest Margins in Colombia

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Summary:

This paper analyzes the determinants of interest margins in the Colombian Financial System. Based on the model by Ho and Saunders (1981), interest margins are modeled as a function of the pure spread and bank-specific institutional imperfections using quarterly data for the period 1994:IV-2005:III. Additionally, the pure spread is estimated as a function of market power and interest rate volatility. The results indicate that interest margins are mainly affected by credit institutions' inefficiency and to a lesser extent by credit risk exposure and market power. This implies that public policies should be oriented towards creating the necessary market conditions for banks to enhance their efficiency.

Author:

Dairo Estrada

Biographie:

Dairo Estrada - Independent Researcher, Economic Research, Colombia.

Number of Pages:

52

Book language:

English

Published On:

2019-06-06

ISBN:

978-3-330-35135-6

Publishing House:

LAP LAMBERT Academic Publishing

Keywords:

Competition, Interest Margins, Interest Rate Risk

Product category:

BUSINESS & ECONOMICS / General