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Banking Spreads in Latin America

R. Gaston Gelos

No 2006/044, IMF Working Papers from International Monetary Fund

Abstract: Intermediation spreads in Latin America are high by international standards. This paper examines the determinants of bank interest margins in that region using bank and country-level data from 85 countries, including 14 Latin American economies. The results suggest that Latin America has higher interest rates, less efficient banks, and larger reserve requirements than other regions and that these factors have a significant impact on spreads. However, Latin American countries do not differ markedly from their peers in other aspects that are found important in determining the cost of financial intermediation, such as inflation and bank profit taxation.

Keywords: WP; bank; interest rate; concentration ratio; Banking spreads; financial intermediation; interest margin; bank spread; case bank; bank competition; Latin America's banks' overhead; balance-sheet information; bank indices; Reserve requirements; Competition; Deposit rates; Legal support in revenue administration; Emerging and frontier financial markets; Global (search for similar items in EconPapers)
Pages: 31
Date: 2006-02-01
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Journal Article: BANKING SPREADS IN LATIN AMERICA (2009) Downloads
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Handle: RePEc:imf:imfwpa:2006/044