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 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.

Bibliographic Details

Main Authors:	Demirguc-Kunt, Asli, Laeven, Luc, Levine, Ross
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2003-04
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
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