Macroeconomic Determinants of Bank Spread in Brazil: An Empirical Evaluation

Guilherme Jonas Costa Da Silva (guilhermejonas@yahoo.com.br), José Luís Oreiro and Luiz Fernando de Paula (luizfpaula@terra.com.br)

No 66, Working Papers from Universidade Federal do Paraná, Department of Economics

Abstract: Despite a decline in interest rates since mid-1999, bank spread in Brazil continues extremely high in international terms and in recent years has stood at around 40%. This paper analyses the determinants of bank spread in Brazil, seeking particularly to analyse the macroeconomic determinants of spread in recent times. It uses a VAR model to identify the macroeconomic variables that may directly or indirectly have been influencing spread in Brazil over the period 1994-2005. It presents evidence that interest rate levels and, to a lesser degree, the inflation rate are the main macroeconomic determinants of high bank spread in Brazil.

Keywords: Bank Spread; VAR models; Brazilian banking sector (search for similar items in EconPapers)
JEL-codes: E43 E44 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007
Note: Creation Date corresponds to the year in which the paper was published on the Department of Economics website. The paper may have been written a small number of months before its publication date.
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Citations: View citations in EconPapers (2)

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