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Macroeconomic Determinants of Bank Spread in Brazil: An Empirical Evaluation

Guilherme Jonas Costa Da Silva (), José Luís Oreiro () and Luiz Fernando de Paula ()

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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