Understanding the behavior of bank spreads in Latin America

Brock, Philip L.; Suárez, Liliana

doi:10.1016/s0304-3878(00)00102-4

Cited by 280 publications

(244 citation statements)

References 9 publications

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“…This can reduce the deposit cost of the well-thriven banks leading to higher profit margins. This result is in accordance with that of other studies, namely Demirguc-Kunt and Huizinga, (1999); Ben Naceur, (2003); Kosmidou and Pasiouras, (2005); Valverde and Fernandez, (2007); Brock and Suarez, (2000); Demirguç-Kunt, Loeven and Levine, (2004) ; and Saunders and Schumacher (2000).…”

Section: H2: Credit Risk Has a Positive Impact On Bank Profitabilitysupporting

confidence: 93%

The Determinants of the Profitability of the Tunisian Deposit Banks

Ayadi¹,

Boujelbène²

2012

IBIMABR

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Thanks to the study of twelve Tunisian deposit banks, the researchers were able to identify the influence of these determinants on the bank profitability, using a technique of panel data over the period of 1995-2005. The empirical results suggest that the bank capitalization, as well as the size, have a positive and significant effect on the bank profitability. The empirical results indicate that the variables of financial structure, the ratio of the bank assets to the GDP and that of the stock market capitalization to the banking assets have a negative and a statistically significant effect. As for the impact of the macroeconomic indicators, the researchers conclude that the variables do not have a significant effect on bank profitability. Finally, the results indicate the substitutability between banks and financial markets.

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Section: H2: Credit Risk Has a Positive Impact On Bank Profitabilitysupporting

confidence: 93%

The Determinants of the Profitability of the Tunisian Deposit Banks

Ayadi¹,

Boujelbène²

2012

IBIMABR

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“…This latter finding is tentatively explained by the authors as a result of inadequate provisioning for loan losses: higher non-performing loans would reduce banks´ income, thereby lowering the spread in the absence of loan loss reserves. This study by Brock & Rojas-Suarez (2000) also found a tendency, nonetheless weak, for higher output growth rates to lower the spread, which the authors claim that may reflect the fact that high growth generally raises the capitalized value of firms and reduces the cost of lending by lowering default risk.…”

Section: Structure Of the Modelmentioning

confidence: 76%

“…According to the study conducted by Demirgüç-Kunt & Huizinga (1999), using bank-level data for 80 countries in the years 1988-95, output growth does not seem to have any impact on bank spread, though. In turn, Brock & Rojas-Suarez (2000) studied the determinants of banking spreads in six Latin American countries during the mid-1990s and found a more mixed evidence, with higher levels of non-performing loans having raised spreads in some countries, but having lowered them in others. This latter finding is tentatively explained by the authors as a result of inadequate provisioning for loan losses: higher non-performing loans would reduce banks´ income, thereby lowering the spread in the absence of loan loss reserves.…”

Section: Structure Of the Modelmentioning

confidence: 99%

Macrodynamics of debt regimes, financial instability and growth

Lima¹,

Meirelles

2006

Cambridge Journal of Economics

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It is developed a dynamic macromodel of utilization and growth of productive capacity, in which the supply of credit-money is endogenous and firms' debt position -and thus the financial fragility of the economy à la Hyman Minsky -is explicitly modeled. The rate of interest is set as a markup over the base rate, which is exogenously determined by the monetary authority. Banking markup varies with changes in economic activity, which is measured by capacity utilization, while firms' debt position varies with the rates of interest, profit and capital accumulation. Regarding dynamics, it is shown the possibility of relating the stability properties of a system with the interest rate and the debt ratio as state variables to the type of minskyan regime -hedge, speculative, Ponzi -which prevails. Key words: debt regimes; financial instability; growth Resumo: Desenvolve-se um modelo dinâmico de utilização e crescimento da capacidade produtiva, no qual a oferta de moeda de crédito é endógena e o endividamento das firmase, portanto, a fragilidade financeira da economia à Hyman Minsky -é explicitamente modelado. A taxa de juros é determinada através de um mark-up sobre a taxa básica fixada pela autoridade monetária. O mark-up bancário varia com mudanças no nível de atividade econômica, medido pela utilização da capacidade produtiva. Por seu turno, o grau de endividamento das firmas varia em função das taxas de lucro, de acumulação de capital físico e de juros. Em termos dinâmicos, mostra-se que é possível relacionar as condições de estabilidade do sistema formado pelas variáveis taxa de juros e endividamento das firmas ao tipo de regime minskyano -hedge, especulativo ou Ponzi -prevalecente. Palavras-chave: regimes de endividamento; instabilidade financeira; crescimento

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“…Finally, we consider as control variables the inflation rate (Perry, 1992), the growth rate of GDP per capita (Ben Naceur & Goaied, 2008), the reserve requirements (Brock & Rojas Suárez, 2000;, and the economic crises (De la Torre, Ize, & Schmukler, 2012).…”

Section: Extra-bank Determinantsmentioning

confidence: 99%

“…Most of the limitations of the current literature on Latin America are rooted in either the scope and/or the scale of their analyses. For instance, although they use samples for several countries, they study the banking profitability using bank-specific data only (Brock & Rojas Suárez, 2000) or their samples of firms suffer from lack of representativeness in order to carry out further extrapolation (Gelos, 2009). Additionally, most of this already rather scarce empirical literature is focused on the analysis of individual countries such as Colombia (Barajas, Steiner, & Salazar, 1999), Chile (Brock & Franken, 2003), Argentina (Catão, 1998), or Brazil (Afanasieff, Lhacer, & Kanane, 2002).…”

Section: Introductionmentioning

confidence: 99%