Determinants of the Interest Rate Margins of Austrian Banks
AbstractBank interest rate margins have been declining in most EU Member States over the last decade. Drawing on a unique sample of supervisory data for the Austrian banking system from 1996 to 2005, this paper investigates the determinants of bank interest rate margins. The main factors driving the reduction of Austrian banks’ interest rate margins are decreasing operating costs, the growing importance of foreign currency lending combined with a rising share of non interest revenues as well as increasing competition. In contrast to findings in the literature we document a positive effect of relationship banking on margins, with the erosion of relationship banking being another reason for the decline in interest margins.
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Bibliographic InfoArticle provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Financial Stability Report.
Volume (Year): (2006)
Issue (Month): 12 ()
Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
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