Financial Intermediation Costs in Low-Income Countries : The Role of Regulatory, Institutional, and Macroeconomic Factors / Tigran Poghosyan.

Format:

Book

Government document

Author/Creator:

Poghosyan, Tigran.

International Monetary Fund. Fiscal Affairs Department.

Contributor:

International Monetary Fund. Strategy, Policy, and Review Department.

Series:

IMF Working Papers; Working Paper ; No. 2012/140

IMF Working Papers

Language:

English

Subjects (All):

Intermediation (Finance)--Developing countries--Econometric models.

Intermediation (Finance).

Physical Description:

1 online resource (36 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2012.

Language Note:

English

Summary:

We analyze factors driving persistently higher financial intermediation costs in low-income countries (LICs) relative to emerging market (EMs) country comparators. Using the net interest margin as a proxy for financial intermediation costs at the bank level, we find that within LICs a substantial part of the variation in interest margins can be explained by bank-specific factors: margins tend to increase with higher riskiness of credit portfolio, lower bank capitalization, and smaller bank size. Overall, we find that concentrated market structures and lack of competition in LICs banking systems and institutional weaknesses constitute the key impediments preventing financial intermediation costs from declining. Our results provide strong evidence that policies aimed at fostering banking competition and strengthening institutional frameworks can reduce intermediation costs in LICs.

Contents:

Cover; Contents; I. Introduction; II. Interest Margin Decomposition; A. Conceptual Framework; B. Decomposition Results; III. Econometric Analysis of Bank- and Country-Specific Determinants of Interest Margins; A. Model Specification; B. Variables; C. Descriptive Statistics; D. Results; IV. Robustness Checks; V. Conclusions; References; Figures; 1. Comparison of Implicit Net Interest Margins in LICs and EMs; 2. Percentile Distribution of Net Interest Margin Determinants in LICs and EMs; 3. Median Interest Margins in LICs and EMs by Countries; Tables; 1. Variable Definition and Sources

2. Descriptive Statistics3. Correlations Matrix; 4. Estimation Results Controlling for Bank-Specific Determinants; 5. Estimation Results Controlling for Macroeconomic Variables; 6. Estimation Results Controlling for Institutional Variables; 7. Estimation Results Controlling for Regulatory Variables; 8. Robustness Check for LICs: Using Market Share Instead of Market Concentration; 9. Robustness Check for LICs: Using Loan Market Concentration; 10. Robustness Check for LICs: Using Deposit Market Concentration

11. Robustness Check for LICs: Using Interaction of Market Concentration with Regional Dummies12. Robustness Check for LICs: Using Annual Average Variables

Notes:

"Fiscal Affairs Department and Strategy, Policy, and Review Department."

"May 2012."

Includes bibliographical references.

Description based on print version record.

ISBN:

9781475522808

1475522800

9781475564136

1475564139

OCLC:

870245008