What determines the interest margin? An analysis of the German banking system

Alexander Karmann, Andreas Bühn and Marco Pedrotti ()
Authors registered in the RePEc Author Service: Andreas Buehn

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: This paper analyzes the determinants of the interest margin of German banks over the period 1995-2007, explicitly addressing differences among different bank groups. We use three empirical models to focus on the following aspects: the time evolution of the interest margin, the average differences across groups, and the presence of autoregressive effects. For each model our results show that the interest margin can be mainly explained by market power and inefficiency, the influence of which is particularly high for cooperative banks. The Winner s Curse phenomenon and the cross-subsidization strategy negatively influence the margin of private banks.

JEL-codes: G21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ban and nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:80029

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