Determinants of Lending Rates and Interest Rate Spreads in Macedonia

Ljupka Georgievska (), Rilind Kabashi, Nora Manova-Trajkovska (), Ana Mitreska () and Mihajlo Vaskov ()
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Ljupka Georgievska: National Bank of the Republic of Macedonia
Nora Manova-Trajkovska: National Bank of the Republic of Macedonia
Ana Mitreska: National Bank of the Republic of Macedonia
Mihajlo Vaskov: National Bank of the Republic of Macedonia

No 2010-03, Working Papers from National Bank of the Republic of North Macedonia

Abstract: This paper focuses on investigating the determinants of lending rates and interest rate spreads in Macedonia. In order to quantify the effect of various factors on lending rates and interest rate spreads during the 2001-2009 period, we use panel estimation techniques on a sample of commercial banks in Macedonia. Our results indicate that lending rates are mostly influenced by bank size and market share, and to a somewhat lesser extent by deposit rates and non-performing loans. In addition, policy variables such as the domestic policy rate and the foreign interest rate also appear to be quite important. Furthermore, bank size and market share, as well as the differential between domestic and foreign rates, are the most important factors affecting interest rate spreads, while the effect of other factors is less clear-cut.

Keywords: interest rates; banking system; panel estimation; Macedonia (search for similar items in EconPapers)
JEL-codes: C23 E43 G21 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-08
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Citations: View citations in EconPapers (5)

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