IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Macroeconomic and market determinants of interest rate spreads in low- and middle-income countries

Listed author(s):
  • David Tennant
  • Abiodun Folawewo

Numerous variables exogenous to the operations of commercial banks have been widely touted in academic literature and popular discourse to be important factors causing the typically high Interest Rate Spreads (IRS) in developing countries. Using data for a group of 33 countries, this article applies dynamic panel estimation techniques to investigate the macroeconomic and market determinants of banking sector IRS in low- and middle-income countries. The empirical results suggest that only one market specific factor, the banking sector reserve requirement, significantly and positively affects IRS. Conversely, several macroeconomic and macro-policy variables such as inflation, government crowding-out and the discount rate are important determinants of IRS. Results are also examined to ascertain whether the determinants of spreads vary across regional groupings of countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

Volume (Year): 19 (2009)
Issue (Month): 6 ()
Pages: 489-507

in new window

Handle: RePEc:taf:apfiec:v:19:y:2009:i:6:p:489-507
DOI: 10.1080/09603100701857930
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:apfiec:v:19:y:2009:i:6:p:489-507. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.