Publication: The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins
Date
2003-04
ISSN
Published
2003-04
Author(s)
Abstract
This paper examines the impact of bank
regulations, concentration, inflation, and national
institutions on bank net interest margins using data from
over 1,400 banks across 72 countries while controlling for
bank-specific characteristics. The data indicate that
tighter regulations on bank entry and bank activities boost
net interest margins. Inflation also exerts a robust,
positive impact on bank margins. While concentration is
positively associated with net interest margins, this
relationship breaks down when controlling for regulatory
impediments to competition and inflation. Furthermore, bank
regulations become insignificant when controlling for
national indicators of economic freedom or property rights
protection, while these institutional indicators robustly
explain cross-bank net interest margins. So, bank
regulations cannot be viewed in isolation. They reflect
broad, national approaches to private property and competition.
Link to Data Set
Citation
“Demirguc-Kunt, Asli; Laeven, Luc; Levine, Ross. 2003. The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins. Policy Research Working Paper;No. 3030. © World Bank, Washington, DC. http://hdl.handle.net/10986/18228 License: CC BY 3.0 IGO.”
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