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Africa > Uganda

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Books and Analytical Papers x
  • Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill x
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Cover IMF Working Papers
Determinants of Bank Interest Margins in Sub-Saharan Africa
Mr. Calixte Ahokpossi
Financial intermediation is low in sub-Saharan Africa (SSA) compared to other regions of the world. This paper examines the determinants of bank interest margins using a sample of 456 banks in 41 SSA countries. The results show that market concentration is positively associated with interest margins, but the impact depends on the level of efficiency of each bank. In particular, compared to inefficient banks, efficient ones increase their margins more in concentrated markets. This indicates that policies that promote competition and reduce market concentration would help lower interest margins in SSA. The results also show that bank-specific factors such as credit risk, liquidity risk, and bank equity are important determinants of interest margins. Finally, interest margins are sensitive to inflation, but not to economic growth or public or foreign ownership. There are regional differences within SSA regarding the level of interest margins even after controlling for other factors.
Keywords:
WP; center; bank; interest margin; Banks interest margins; commercial banks; bank margin; bank inefficiency; bank activity; bank data; bank size; bank characteristic; bank behavior; Credit risk; Liquidity risk; State-owned banks; Foreign banks; Sub-Saharan Africa; East Africa; West Africa; Southern Africa
Cover IMF Working Papers
Financial Intermediation Costs in Low-Income Countries: The Role of Regulatory, Institutional, and Macroeconomic Factors
Mr. Tigran Poghosyan
We analyze factors driving persistently higher financial intermediation costs in low-income countries (LICs) relative to emerging market (EMs) country comparators. Using the net interest margin as a proxy for financial intermediation costs at the bank level, we find that within LICs a substantial part of the variation in interest margins can be explained by bank-specific factors: margins tend to increase with higher riskiness of credit portfolio, lower bank capitalization, and smaller bank size. Overall, we find that concentrated market structures and lack of competition in LICs banking systems and institutional weaknesses constitute the key impediments preventing financial intermediation costs from declining. Our results provide strong evidence that policies aimed at fostering banking competition and strengthening institutional frameworks can reduce intermediation costs in LICs.
Keywords:
WP; interest margin; LICS bank; bank characteristic; dependent variable; Net Interest Margins; Banks; Low Income Countries; Emerging Economies; entry application; margin determinant; bank efficiency; intermediation service; Credit risk; Reserve requirements; Loan loss provisions; Inflation; Competition; Western Hemisphere