Assessing the Determinants of Interest Rate Spread of Commercial Banks in Oman: An Empirical Investigation
Faris Nasif Al Shubiri and
Syed Ahsan Jamil
European Research Studies Journal, 2017, vol. XX, issue 2A, 90-108
This study aims to examine the factors that determine interest rate spread (IRS) of commercial banks listed on Muscat security market over the period 2008 – 2014. They are classified into four groups of financial, economic, market and legal indicators.The Spearman correlation matrix results show that all economic indicator variables have significant relationship with interest rate spread except GDP variable. No significant relationship exists between financial indicator variables and interest rate spread, but in legal indicator variables there is significant relationship with interest rate spread only in two variables the size of government and regulation. Finally, there is a significant relationship between market indicator based on market concentration measured by Herfindahl-Hirschman Index and interest rate spread.OLS regression analysis indicates a statistically significant impact on IRS by factors like return to asset ratio, liquidity risk and risk aversion within the financial group and unemployment rate, debt services ratio and principal repayment from the economic group and Herfindahl-Hirschman Index based on market concentration group.Finally, there is a significant impact of sound money and regulation within the legal group on IRS. The researchers recommend an adaptation in the monetary policy to exploit the high level of liquidity in the banking sector by facilitating easy access to debt to individuals as well as firms thus providing the margin competitive interest rate.
Keywords: Interest Rate Spread; Commercial Banking; Monetary Policy; Oman (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ers:journl:v:xx:y:2017:i:2a:p:90-108
Access Statistics for this article
More articles in European Research Studies Journal from European Research Studies Journal
Bibliographic data for series maintained by Marios Agiomavritis ().