What Drives the Gross Margins of Mortgage Loans? Evidence from Switzerland

Andreas Dietrich ()
Additional contact information
Andreas Dietrich: Lucerne University of Applied Sciences

Journal of Financial Services Research, 2016, vol. 50, issue 3, No 3, 362 pages

Abstract: Abstract This paper empirically examines the determinants of margins for a unique dataset of 1,190,811 mortgage loans with fixed interest rates of eight Swiss banks over the period from 2001 to 2011. Our margin determinants include loan-specific factors as well as external and bank-specific characteristics, some of which have not been considered in previous studies. Our results reveal that loan-specific factors such as repricing, representing the credit period until the interest rate is newly set, and loan volume explain a substantial part of our dependent variable. Furthermore, external factors also significantly affect mortgage loan margins. Mortgages granted in cities have lower interest rates than those allocated in rural areas. The role of competition is also considered and the findings show that margins are higher in less concentrated and thus less competitive markets. Declining mortgage loan margins can be further explained by means of increasing operational efficiency and the mortgage growth strategy of a bank.

Keywords: Commercial bank; Net interest margin; Mortgage loans (search for similar items in EconPapers)
JEL-codes: E43 G21 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s10693-015-0229-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jfsres:v:50:y:2016:i:3:d:10.1007_s10693-015-0229-7

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10693

DOI: 10.1007/s10693-015-0229-7

Access Statistics for this article

Journal of Financial Services Research is currently edited by Haluk Unal

More articles in Journal of Financial Services Research from Springer, Western Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().