Bank Efficiency and Market Structure: What Determines Banking Spreads in Armenia?
AbstractDespite far-reaching banking sector reforms and a prolonged period of macroeconomic stability and strong economic growth, financial intermediation in Armenia has lagged behind other transition countries, and interest rate spreads have remained higher than in most Central and Eastern European transition countries. This paper examines the determinants of interest rate spreads and margins in Armenia using a bank-level panel dataset for the period 2002 to 2006. We find that bank-specific factors, such as bank size, liquidity, and market power, as well as the market structure within which banks operate, explain a large proportion of crossbank, cross-time variation in spreads and margins. The results suggest that there is a large potential to increase cost efficiency and competition in the banking system.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/134.
Date of creation: 01 Jun 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-23 (All new papers)
- NEP-BAN-2007-06-23 (Banking)
- NEP-COM-2007-06-23 (Industrial Competition)
- NEP-EFF-2007-06-23 (Efficiency & Productivity)
- NEP-TRA-2007-06-23 (Transition Economics)
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- Chuling Chen, 2009. "Bank Efficiency in Sub-Saharan African Middle Income Countries," IMF Working Papers 09/14, International Monetary Fund.
- King Banaian, 2009. "Macroeconomic Impact of the Financial Crisis on Armenia," Working Papers 2009-1, Saint Cloud State University, Department of Economics, revised 14 Aug 2009.
- Poghosyan, Tigran, 2010. "Re-examining the impact of foreign bank participation on interest margins in emerging markets," Emerging Markets Review, Elsevier, vol. 11(4), pages 390-403, December.
- Brown, Martin & Maurer, Maria Rueda & Pak, Tamara & Tynaev, Nurlanbek, 2009. "The impact of banking sector reform in a transition economy: Evidence from Kyrgyzstan," Journal of Banking & Finance, Elsevier, vol. 33(9), pages 1677-1687, September.
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