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Banks’ Net Interest Margin in the 2000s: A Macro-Accounting International Perspective

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  • Germán López-Espinosa

    ()
    (Department of Business Administration, University of Navarra)

  • Antonio Moreno

    ()
    (Department of Economics and Quantitative Methods, University of Navarra)

  • Fernando Pérez de Gracia

    ()
    (Department of Economics and Quantitative Methods, University of Navarra)

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

Paper provided by School of Economics and Business Administration, University of Navarra in its series Faculty Working Papers with number 11/11.

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Length: 41 pages
Date of creation: 21 Oct 2011
Date of revision:
Publication status: Published in Journal of International Money and Finance
Handle: RePEc:una:unccee:wp1111

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Web page: http://www.unav.es/facultad/econom

Related research

Keywords: Net Interest Margin; Efficiency; Accounting Standards; Macro-Accounting; IFRSs; Financial Stability;

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Cited by:
  1. Trinugroho, Irwan & Agusman, Agusman & Tarazi, Amine, 2014. "Why have bank interest margins been so high in Indonesia since the 1997/1998 financial crisis?," Research in International Business and Finance, Elsevier, vol. 32(C), pages 139-158.
  2. Leonardo Becchetti & Rocco Ciciretti & Adriana Paolantonio, 2014. "Is There a Cooperative Bank Difference?," CEIS Research Paper 313, Tor Vergata University, CEIS, revised 17 Apr 2014.

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