Description: The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins

The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins

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...

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Bibliographic Details
Main Authors:	Demirguc-Kunt, Asli, Laeven, Luc, Levine, Ross
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTABILITY ACCOUNTING BANK ASSETS BANK CAPITALIZATION BANK FOR INTERNATIONAL SETTLEMENTS BANK LOANS BANK REGULATION BANK RISK BANK SIZE BANK STRUCTURE BANKING INDUSTRY BANKING SECTOR BANKING STRUCTURE BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKS BOOK VALUE BORROWING CAPITAL ADEQUACY CAPITAL REQUIREMENTS CERTAIN EXTENT CIVIL SERVICE COMMERCIAL BANKS COMPETITIVENESS CONSOLIDATION CONTRACT ENFORCEMENT COST FUNCTIONS COST SAVINGS COVERAGE CPI DEPOSITS DEREGULATION ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIC SIZE ECONOMICS ECONOMIES OF SCOPE EMPIRICAL EVIDENCE EQUILIBRIUM FEDERAL RESERVE SYSTEM FINANCIAL INTERMEDIATION FINANCIAL SECTOR FINANCIAL SYSTEMS GDP GDP PER CAPITA GOVERNMENT SECURITIES GROWTH RATE INCREASING RETURNS INCREASING RETURNS TO SCALE INEFFICIENCY INFLATION INFLATION RATE INFLATION RATES INSTITUTIONAL DEVELOPMENT INSURANCE INTEREST EXPENSE INTEREST INCOME INTEREST RATE INTEREST RATES INTERNATIONAL TRADE LIQUID ASSETS LIQUIDITY MACROECONOMIC CONDITIONS MACROECONOMIC STABILITY MARKET COMPETITION MARKET POWER MERGERS NET INTEREST MARGIN OPERATING INCOME OVERHEAD COSTS PRIVATE PROPERTY PROFITABILITY PROPERTY RIGHTS PUBLIC POLICY REGULATORY SYSTEMS RESERVE REQUIREMENT RESERVE REQUIREMENTS RETURN ON ASSETS SAVINGS SECURITIES SECURITIES MARKETS SMALL BANKS THEORETICAL MODELS UNDERWRITING VALUATION BANK REGULATIONS INFLATIONARY PRESSURES INSTITUTIONAL ECONOMICS CONCENTRATION-RESPONSE REGULATORY FRAMEWORK COMPETITION POLICY ECONOMIC INDICATORS VALUATION BANK REGULATIONS
Online Access:	http://documents.worldbank.org/curated/en/2003/04/2350352/impact-bank-regulations-concentration-institutions-bank-margins http://hdl.handle.net/10986/18228

Description
Summary:	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.

The Impact of Bank Regulations, Concentration, and Institutions on Bank Margins

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