 Determinants of Interest Spread in PakistanMuhammad Khawaja and Musleh-ud Din () The Pakistan Development Review, 2007, vol. 46, issue 2, 129-143 Abstract: Interest spread of Pakistan s banking industry has been on the rise for the last two years. The increase in interest spread discourages savings and investments, on the one hand, and raises concerns about the effectiveness of the bank-lending channels of monetary policy, on the other. This study examines the determinants of interest spread in Pakistan using panel data of 29 banks. The results show that the share of interest-insensitive deposits in total bank deposits is a key determinant of interest spread, whereas industry concentration has no significant impact on interest spread. Furthermore, the ongoing merger wave in the banking industry will limit the options for the savers, with adverse implications for the interest spread. We argue that to maintain a reasonably competitive environment, merger proposals may be subjected to review by an anti-trust authority. Keywords: Banks; Determination of Interest Rates; Mergers; Acquisitions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:46:y:2007:i:2:p:129-143 Access Statistics for this article More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC. |
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