Cover IMF Working Papers
Determinants of Banks' Net Interest Margins in Honduras
Author:
Koffie Ben Nassar
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Edder Martineznull

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Anabel Pinedanull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2014: Issue 163
Language:
English
Publication Date:
09 Sep 2014
DOI:
https://doi.org/10.5089/9781498317931.001
ISBN:
9781498317931
ISSN:
1018-5941
Pages:
26
Keywords:
WP; interest margin; bank; real GDP; Banks’ interest margins; Commercial banks; Panel corrected standard errors (PCSE); bank ownership; funding model; bank default; parent bank; Foreign banks; Credit risk; Loans; Liquidity risk; Europe; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper analyzes the determinants of banks’ net interest margins in Honduras during 1998 to 2013—a period characterized by increasing banks’ net interest margins, foreign bank participation and consolidation. In line with findings in the previous literature, we find that operating costs are the most important drivers of banks’ net interest margins. We also find that competition among banks has led to higher concentration and that funding by parent banks positively impacts foreign banks’ net interest margins. Together, these results suggest that banks, particularly foreign banks, are under pressure to consolidate and reduce operating costs in order to offer competitive interest margins. We conclude that further structural reforms and consolidation may lower banks’ net interest margins.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2014: Issue 163