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Bank interest margins in OECD countries

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  • Hawtrey, Kim
  • Liang, Hanyu

Abstract

This paper extends the literature on bank interest margins by providing empirical evidence using panel data covering the banking sector of fourteen OECD countries. Each country's banking sector is treated as a single representative firm viewed as a national risk-averse dealer setting loan and deposit rates to balance the random arrivals of loan requests and deposit supplies. We find that national industry margins are influenced by market power, operational cost, risk aversion, interest rate volatility, credit risk, volume of loans, implicit interest payments and quality of management.

Suggested Citation

  • Hawtrey, Kim & Liang, Hanyu, 2008. "Bank interest margins in OECD countries," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 249-260, December.
    • Handle: RePEc:eee:ecofin:v:19:y:2008:i:3:p:249-260
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    References listed on IDEAS

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    1. Tarsila Segalla Afanasieff & Priscilla Maria Villa Lhacer & Márcio I. Nakane, 2002. "The Determinants of Bank Interest Spread in Brazil," Money Affairs, CEMLA, vol. 0(2), pages 183-207, July-Dece.
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    5. Claeys, Sophie & Vander Vennet, Rudi, 2008. "Determinants of bank interest margins in Central and Eastern Europe: A comparison with the West," Economic Systems, Elsevier, vol. 32(2), pages 197-216, June.
    6. Maudos, Joaquin & Fernandez de Guevara, Juan, 2004. "Factors explaining the interest margin in the banking sectors of the European Union," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2259-2281, September.
    7. Saunders, Anthony & Schumacher, Liliana, 2000. "The determinants of bank interest rate margins: an international study," Journal of International Money and Finance, Elsevier, vol. 19(6), pages 813-832, December.
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