Naslov
The Determinants of Bank Interest Margins: A Political Economy View

Autori
Bađun, Marijana

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, neobjavljeni rad, znanstveni

Skup
Finance and Growth in Central and Eastern Europe

Mjesto i datum
Zagreb, Hrvatska, 29.04.2010. - 30.04.2010

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Nije recenziran

Ključne riječi
bank interest margin ; banks ; government ; institutions ; interest groups

Sažetak
The purpose of this paper is to examine whether countries in which government's role is large and corruption widespread have higher bank interest margins. The importance of institutions has already been taken into account when analyzing the determinants of bank interest margins ; widespread corruption and a weak legal system increase the cost of financial intermediation because of uncertainties they create. However, attention has not been given to the relationship between government and banks from the political economy view in terms of rent-seeking and interest groups. Government's role tends to be far from benevolent social planning and its policy results can be influenced by interest groups. In addition, economic history research has shown that banks have always enjoyed close relationships with political power. We examine the determinants of bank margins on the sample of Central and Eastern Europe transition economies, as well as "old" EU countries. Time period of the sample is from 1996 to 2008, and panel analysis is applied. Results show that corruption and rule of law are important determinants of bank interest margins in the observed countries, but that it is difficult to find a right proxy for government involvement in the economy.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA