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What Drives Interest Rate Spreads in Pacific Island Countries? An Empirical Investigation / Fazurin Jamaludin, Vladimir Klyuev, Anuk Serechetapongse.
- Format:
- Book
- Government document
- Author/Creator:
- Jamaludin, Fazurin.
- Series:
- IMF Working Papers; Working Paper ; No. 2015/096
- IMF Working Papers
- Language:
- English
- Subjects (All):
- Finance, Public--Islands of the Pacific--Accounting.
- Islands of the Pacific--Economic policy.
- Oceania--Economic policy.
- Local Subjects:
- Finance, Public--Islands of the Pacific--Accounting.
- Islands of the Pacific--Economic policy.
- Oceania--Economic policy.
- Physical Description:
- 1 online resource (48 p.)
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2015.
- Language Note:
- English
- Summary:
- Growth has been sluggish in Pacific island countries (PICs). High cost of credit is likely one of the reasons. While the small scale, geographic dispersion, and vulnerability to shocks increase the cost and risk of credit in this country group, there is considerable variability in interest rate spreads both across countries and over time. This paper examines the determinants of lending rates and interest rate spreads in a panel of six PICs, extending the literature that was largely descriptive in nature or focused on a single country. Our results are in line with economic theory. We find that the size of the economy is negatively correlated with spreads, confirming the importance of scale. Inflation appears to have only marginal impact on spreads. High loan loss provisions and nonperforming loans increase the cost of credit. So does banking system concentration. Higher institutional quality is associated with lower spreads.
- Contents:
- Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. The Banking Systems in the Pacific Islands: A Few Stylized Facts; III. Literature Review; IV. Methodology; V. Results; VI. Conclusions and Policy Implications; References; Table IV: Impact of Macroeconomic, Banking Sector Variables, and Contemporaneous Deposit Rate on Lending Rate; Table IIIb: Impact of Macroeconomic and Banking Sector Variables on Spreads; Table IIIa: Impact of Macroeconomic and Banking Sector Variables on Spreads; Table II: Summary Statistics; Table I: Data Definitions and Sources; Footnotes
- Notes:
- Description based upon print version of record.
- Description based on print version record.
- ISBN:
- 9781484362600
- 1484362608
- 9781484362440
- 1484362446
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