The paper provides a model of the banking firm in the macroeconomy intended to explain what determines the interest rate spread. A key factor explaining the spread in our model is the resource cost of capital. A statistical result confirms the prediction of the model, that is, the bank's spread is higher in low income economies.
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Paper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number
003566.
Length: 16 Date of creation: 30 May 1998 Date of revision: Handle: RePEc:col:000094:003566
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