Determinants of net interest margin under regulatory requirements: an econometric study

Saibal Ghosh, Aditya Narain and R Kannan

MPRA Paper from University Library of Munich, Germany

Abstract: Using data for the period 1995-96 to 1999-2000, this paper seeks to identify the factors influencing spreads of Scheduled Commercial Banks in India. Among the explanatory variables, we incorporate, in addition to the standard set of variables, regulatory requirement variables. Our analysis reveals that (i) size does not necessarily correlate with higher spread, and (ii) higher fee income enables banks to tolerate lower spreads. With regard to regulatory requirement variables, it is found that (i) capital plays an important role in affecting spreads of public sector banks, and (ii) non-performing assets is uniformly important across all bank groups in influencing spreads.

Keywords: Net interest margin; regulatory requirements; banking; India (search for similar items in EconPapers)
JEL-codes: C23 G21 (search for similar items in EconPapers)
Date: 2001-01-27
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Citations: View citations in EconPapers (4)

Published in Economic and Political Weekly (2001): pp. 337-344

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