Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
Using a unique bank-level data set on the Ugandan banking system during 1999-2005, the authors explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, they 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 bank variation in spreads and margins. Further, the authors find tentative evidence that banks targeting the low end of the market incur higher costs and therefore higher margins.
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Bibliographic Details
Main Authors: |
Hesse, Heiko,
Beck, Thorsten |
Language: | English en_US |
Published: |
World Bank, Washington, DC
2006-10
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Subjects: | ADVERSE SELECTION,
AGRICULTURE,
ASYMMETRIC INFORMATION,
BAD DEBT,
BALANCE SHEET INFORMATION,
BANK CAPITAL,
BANK PRIVATIZATION,
BANK REGULATION,
BANK SIZE,
BANKING CRISIS,
BANKING SECTOR,
BANKING SUPERVISION,
BANKING SYSTEM,
BANKING SYSTEMS,
BENCHMARK,
COMMERCIAL BANKS,
COMPETITIVENESS,
COUNTRY COMPARISONS,
DEPOSIT ACCOUNTS,
DEPOSITORS,
DEPOSITS,
EARNING ASSETS,
EMPIRICAL ANALYSIS,
FINANCIAL INSTITUTIONS,
FINANCIAL INTERMEDIATION,
FINANCIAL LIBERALIZATION,
FINANCIAL SECTOR,
FINANCIAL SECTOR REFORM,
FINANCIAL SYSTEMS,
FIXED ASSETS,
FOREIGN BANKS,
FOREIGN OWNERSHIP,
FUTURE RESEARCH,
GDP,
INCOME STATEMENTS,
INFLATION,
INFLATION RATE,
INFLATION RATES,
INSIDER TRANSACTIONS,
INTEREST COSTS,
INTEREST INCOME,
INTEREST MARGIN,
INTEREST RATE,
INTEREST RATES,
LATIN AMERICAN,
LIQUID ASSETS,
LIQUIDITY,
LIQUIDITY RATIO,
LOAN CLASSIFICATION,
LOAN LOSS PROVISIONS,
MACROECONOMIC CONDITIONS,
MARGINAL COST,
MICROFINANCE,
MORAL HAZARD,
NATIONALIZATION,
NET INTEREST MARGIN,
OPERATING COSTS,
OVERHEAD COSTS,
OWNERSHIP STRUCTURE,
PORTFOLIO,
PORTFOLIO COMPOSITION,
PORTFOLIOS,
POSITIVE EFFECTS,
PRIVATIZATION,
PROFITABILITY,
REAL GDP,
RESOURCE MOBILIZATION,
RETURN ON ASSETS,
RISK PREMIUM,
RISK PREMIUMS,
ROA,
SAVINGS,
SECURITIES,
SHAREHOLDERS,
SMALL BANKS,
STATEMENT,
SUB-SAHARAN AFRICA,
TRANSACTION COSTS,
TRANSPORT,
TREASURY BILL,
VOLATILITY, |
Online Access: | http://documents.worldbank.org/curated/en/2006/10/7105070/bank-efficiency-ownership-market-structure-interest-spreads-so-high-uganda
https://hdl.handle.net/10986/9270
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