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Regulations, market structure, institutions, and the cost of financial intermediation

Asli Demirguc-Kunt, Luc Laeven () and Ross Levine ()

Proceedings, 2004, 593-626

Abstract: This paper examines the impact of bank regulations, market structure, and national institutions on bank net interest margins and overhead costs using data on over 1400 banks across 72 countries while controlling for bank specific characteristics. The data indicate that tighter regulations on bank entry and bank activities boost the cost of financial intermediation. Inflation also exerts a robust, positive impact on bank margins and overhead costs. While concentration is positively associated with net interest margins, this relationship breaks down when controlling for regulatory impediments to competition and inflation.

Keywords: Banking structure; Banks and banking - Costs (search for similar items in EconPapers)
Date: 2004
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Journal Article: Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation (2004)
Working Paper: Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation (2003) Downloads
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Handle: RePEc:fip:fedcpr:y:2004:p:593-626