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The Banking Spread And The Resource Cost Of Capital

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  • Javier Gómez

Abstract

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.

Suggested Citation

  • Javier Gómez, 1998. "The Banking Spread And The Resource Cost Of Capital," Borradores de Economia 3566, Banco de la Republica.
    • Handle: RePEc:col:000094:003566
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    References listed on IDEAS

    as
    1. Zarruk, Emilio R. & Madura, Jeff, 1992. "Optimal Bank Interest Margin under Capital Regulation and Deposit Insurance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(1), pages 143-149, March.
    2. Job Swank, 1996. "Theories Of The Banking Firm: A Review Of The Literature," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 173-207, July.
    3. Swank, Job, 1996. "Theories of the Banking Firm: A Review of the Literature," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 173-207, July.
    4. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
    5. Zarruk, Emilio R., 1989. "Bank spread with uncertain deposit level and risk aversion," Journal of Banking & Finance, Elsevier, vol. 13(6), pages 797-810, December.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Bank spread;

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