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Banks' Net Interest Margin in the 2000s: A Macro-Accounting international perspective

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  • López-Espinosa, Germán
  • Moreno, Antonio
  • Pérez de Gracia, Fernando

Abstract

This paper re-examines the determinants of Net Interest Margin (NIM) in the banking industries of 15 developed and emerging economies. It presents three main contributions with respect to previous studies: first, we analyze the determinants of NIM in the years leading to the 2008 financial crisis; second, we account for the role of different accounting standards across countries; third, we use multi-way cluster estimation methodologies which control for cross-sectional and time-series dependence in macroeconomic and banking variables. We find that the introduction of International Financial Reporting Standards (IFRSs) contributed to lower NIM variations unexplained by standard accounting variables. Interest rate volatility is found to be positively and strongly related to NIM dynamics, whereas inflation risk is often found to be a relevant driver of NIM cross-country differences.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 30 (2011)
Issue (Month): 6 (October)
Pages: 1214-1233

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Handle: RePEc:eee:jimfin:v:30:y:2011:i:6:p:1214-1233

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Web page: http://www.elsevier.com/locate/inca/30443

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Keywords: Net Interest Margin Efficiency Accounting standards Macro-Accounting IFRSs Financial stability;

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References

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Cited by:
  1. Leonardo Becchetti & Rocco Ciciretti & Adriana Paolantonio, 2014. "Is There a Cooperative Bank Difference?," Working Paper Series 03_14, The Rimini Centre for Economic Analysis.
  2. Irwan Trinugroho & Agusman Agusman & Amine Tarazi, 2012. "Why Have Bank Interest Margins Been so High in Indonesia Since the 1997/1998 Financial Crisis?," Working Papers hal-00916531, HAL.

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