Bank interest margins in OECD countries

The quest for growth: The impact of bank strategy on interest margins

“…Empirical tests of the model have verified that interest rate risk, measured using rate volatility, is positively related to bank interest margins (HS; Angbazo, 1997;Saunders & Schumacher, 2000;Maudos & De Guevara, 2004;Valverde & Fernández, 2007;Hawtrey & Liang, 2008). Also credit risk is found to influence margins positively, suggesting that banks add a default risk premium to loan rates (HS; Angbazo, 1997;Maudos & De Guevara, 2004;Hawtrey & Liang, 2008).…”

“…This implies that there is room for an alternative or complementary explanation. Second, most sample periods of recent studies end in 2001 and thus do not cover the period in which the strategic shift towards transaction banking has been most profound (see Hawtrey & Liang, 2008;Valverde & Fernández, 2007). 1 The shift from relationship towards transaction banking has figured prominently in debates on the causes of the credit crisis (Buiter, 2008), yet its implications for interest rate margins have not been researched previously.…”

Interest Rate Spreads in an Emerging Economy: The Case of Pakistan’s Commercial Banking Sector

“…However, the foreign banks and changes in market structure had no significant relation with interest rate spreads. Hawtrey and Liang (2008) studied the bank interest margins in fourteen OEeD countries for the period 1987 to 2001. The explanatory variables they used were market structure, operating cost, degree of risk aversion, interest rate volatility, credit risk, scale effects (transaction size of loans and deposits), implicit interest payments, opportunity cost of bank reserves and managerial efficiency.…”

Intra- and extra-bank determinants of Latin American Banks' profitability

“…This index corresponds to the negative inverse demand elasticity. The values of the index range from 0 (perfect competition) to 1 (monopoly) (Hawtrey & Liang, 2008). Since CONC1 was significant only in a handful of regressions, we decided not to report the results for this variable.…”