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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 macroeconomic intended to explain the determination of the spread between the banks' loan and deposit rates. The model focuses on the resource cost of capital in the detrmination of the spread. A statistical result confirms the prediction of the model, that is, the bank's spread is higher in low incomes economies.

Suggested Citation

  • Javier Gómez, 1998. "The Banking Spread and the Resource Cost of Capital," Borradores de Economia 092, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:092
    DOI: 10.32468/be.92
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank spread; banking firm; banking output; interest rates.;
    All these keywords.

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