The impact of liberalization and foreign investment in Colombia's financial sector

Barajas, Adolfo; Steiner, Roberto; Salazar, Natalia

doi:10.1016/s0304-3878(00)00104-8

Cited by 200 publications

(126 citation statements)

References 10 publications

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“…easier entry for new intermediaries and privatization of public sector firms) have not improved substantially competition and efficiency in the banking system. This is also discussed in Barajas et al (1999Barajas et al ( , 2000 and Urrutia (2000) who point out that by international standards, bank intermediation spreads and overhead expenses in Colombia are on average around 2 percent higher than those in the rest of Latin America, and around 6 percent higher than those in industrialized countries. 9…”

Section: Discussion Of Resultsmentioning

confidence: 62%

“…On the other hand, no significant adjustment occurs 9 For their international comparisons, Barajas et al (1999Barajas et al ( , 2000 and Urrutia (2000) examine three potential measures of efficiency: (i) the difference between the lending and deposit interest rates, (ii) the accounting value of a bank's net interest revenue as a share of its total assets, and (iii) the accounting value of a bank's overhead expenses as a share of its total assets. 10 For Mexico, the average share of foreign currency deposits in M2 was 11% during the pre-financial crisis years of 1990 to 1993.…”

Section: Discussion Of Resultsmentioning

confidence: 99%

See 1 more Smart Citation

On The Dynamics Of Lending And Deposit Interest Rates In Emerging Markets: A Non-Linear Approach

Iregui¹,

Milas²,

Otero³

2002

Studies in Nonlinear Dynamics &Amp; Econometrics

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This paper studies the dynamics of lending and deposit rates in two emerging markets in Latin America: Colombia and Mexico. The dynamics of lending (deposit) interest rates are driven by the exogenous interbank interest rate and deviations from the long-run lending-interbank (deposit-interbank) interest rate relationship. Allowing for different interest rate behavior during periods characterized by large and small values of the spread, the non-linear specification proves superior to the linear one.

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Section: Discussion Of Resultsmentioning

confidence: 62%

Section: Discussion Of Resultsmentioning

confidence: 99%

On The Dynamics Of Lending And Deposit Interest Rates In Emerging Markets: A Non-Linear Approach

Iregui¹,

Milas²,

Otero³

2002

Studies in Nonlinear Dynamics &Amp; Econometrics

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show abstract

“…Luo, Tanna, and De Vita (2016) examine the impact of financial openness on bank profit efficiency and risk using both Chinn-Ito index and the financial freedom index in 140 countries and find that financial openness lowers profit efficiency directly and increases risk through profitability channel. Conversely, Barajas et al (2000) report that financial liberalization and the capital inflows that followed the openness of the capital account had a positive impact on profitability of Colombian banks.…”

Section: Industry-specific Determinantsmentioning

confidence: 96%

Profitability of Commercial Banks Revisited: New Evidence from Oil and Non-Oil Exporting Countries in the MENA Region

Abdullah

Tan

2017

SSRN Journal

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This paper investigates the determinants of commercial bank profitability in oil and non-oil countries of the Middle East and North Africa (MENA) region using data from 11 countries over the period [2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. Since banks are under no obligation to fill reports to Bankscope database, irregular reporting banks are omitted from the sample and the model is re-estimated using only regular reporting banks, and a comparative analysis between total banks' sample and regular reporting banks' sample is provided. Using the two-step system GMM and fixed effects models, the results indicate that credit risk is negative and highly significant when irregular reporting banks are omitted from the sample particularly in non-oil countries unlike the oil countries case, which indicates that adding irregular reporting banks to the sample could lead to bias in some estimated coefficients if they constitute a considerable percentage of the total banks' sample. Diversification is a key determinant for profitability in oil countries. No enough evidence to support the impact of financial inclusion and financial openness on bank profitability. In addition, the global financial crisis has significantly affected bank profitability in oil countries. Several policy implications are provided to the bank management to follow based on each country group.

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“…1 Additional to the contractual and informational framework and the macroeconomic environment, the market structure can have an important impact on the incentives for banks to overcome these market frictions and efficiently intermediate society's savings to borrowers. A number of recent papers have explored the relationship between foreign bank entry, market structure and interest rate spreads and margins (Claessens, Demirguc-Kunt and Huizinga, 2001;Barajas, Steiner and Salazar, 2000;Demirguc-Kunt, Laeven and Levine, 2004) and find a positive relationship between foreign bank entry and intermediation efficiency but no robust relationship between concentration and margins. This paper explores the effect of bank privatization and foreign bank entry on intermediation efficiency, as measured by interest margin and spreads, in the Ugandan banking market over the period 1999 to 2005.…”

Section: Introductionmentioning

confidence: 99%

Bank Efficiency, Ownership, And Market Structure : Why Are Interest Spreads So High In Uganda ?

Beck¹,

Hesse²

2006

Policy Research Working Papers

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Using a unique bank-level dataset on the Ugandan banking system over the period 1999 to 2005, we explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, we do not find a robust and economically significant relationship between privatization, foreign bank entry, market structure and banking efficiency. Similarly, macroeconomic variables can explain little of the over-time variation in bank spreads. Bank-level characteristics, on the other hand, such as bank size, operating costs, and composition of loan portfolio, explain a large proportion of cross-bank, cross-time variation in spreads and margins. However, time-invariant bank-level fixed effects explain the largest part of bankvariation in spreads and margins. Further, we find tentative evidence that banks targeting the low-end of the market incur higher costs and therefore higher margins. JEL Classifications: G21, G30, O16

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The impact of liberalization and foreign investment in Colombia's financial sector

Cited by 200 publications

References 10 publications

On The Dynamics Of Lending And Deposit Interest Rates In Emerging Markets: A Non-Linear Approach

On The Dynamics Of Lending And Deposit Interest Rates In Emerging Markets: A Non-Linear Approach

Profitability of Commercial Banks Revisited: New Evidence from Oil and Non-Oil Exporting Countries in the MENA Region

Bank Efficiency, Ownership, And Market Structure : Why Are Interest Spreads So High In Uganda ?

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