How foreign participation and market concentration impact bank spreads : evidence from Latin America
AbstractIncreasing foreign participation and high concentration levels characterize the recent evolution of banking sectors'market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads during the late 1990s. Their results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3210.
Date of creation: 01 Feb 2004
Date of revision:
Payment Systems&Infrastructure; Banks&Banking Reform; Decentralization; Financial Intermediation; Banking Law; Financial Intermediation; Banking Law; Municipal Financial Management; Financial Crisis Management&Restructuring; Banks&Banking Reform;
Other versions of this item:
- Maria Soledad Martinez Peria & Ashoka Mody, 2004. "How foreign participation and market concentration impact bank spreads: evidence from Latin America," Proceedings, Federal Reserve Bank of Cleveland, Federal Reserve Bank of Cleveland, pages 511-542.
- Martinez Peria, Maria Soledad & Mody, Ashoka, 2004. "How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 36(3), pages 511-37, June.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-08-16 (Accounting & Auditing)
- NEP-ALL-2004-08-16 (All new papers)
- NEP-COM-2004-09-12 (Industrial Competition)
- NEP-FIN-2004-09-12 (Finance)
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