Session
Management, Business and Economics
Description
Studying interest rates has always been in focus of researches. Loans are the main source of funds for businesses and individuals, especially in the Balkan countries. The main problem is that high interest rate margins can indicate many factors, such as: The informal economy, problems with the cadaster system, an ineffective job of courts, the inability of Central Banks to inject liquidity, weaknesses in the quality of financial reporting of businesses, non-performing loans. It looks like all these problems are in favor of banks, by maximizing their profit. It is well known that the intermediary role of bank is to provide the best prosperity for society, preferably at the lowest possible costs. The high level of interest rate spread is an indicator of inefficiency, excessive risk taking and lack of competition. This study aims to measure the effects of the banking, market and macroeconomic structure on the net interest rate spread of the Balkan countries, such as Albania, Kosovo, Macedonia, Bosnia and Herzegovina, and Serbia, for seven years. According with this, the evaluation is made from two tips of methods: statistical and regression analysis. In the end, I can conclude that the net interest margin is influenced by maintaining high levels of capital, non-performing loans, operating expenses and bank capital ownership. Other factors that affect it are bank size, liquidity risk and portfolios performance. Macroeconomic components such as: Market Structure and Gross Domestic Product are assessed without impact. The study of factors that may cause changes in interest rate margins is an interesting and widely dealt with by foreign literature. Such an approach may be useful for specific measures of economic policy, taking into account the prospect of EU integration and other researcher that want to expand this study.
Keywords:
Interest rate margins. Capital, Risk, Ownership, Competition
Session Chair
Edmond Hajrizi
Session Co-Chair
Armend Muja
Proceedings Editor
Edmond Hajrizi
ISBN
978-9951-437-69-1
First Page
21
Last Page
31
Location
Pristina, Kosovo
Start Date
27-10-2018 1:30 PM
End Date
27-10-2018 3:00 PM
DOI
10.33107/ubt-ic.2018.312
Recommended Citation
Gjikolli, Fidane Spahija, "The determinants of bank interest rate margins: A panel approach for some Balkan countries" (2018). UBT International Conference. 312.
https://knowledgecenter.ubt-uni.net/conference/2018/all-events/312
Included in
The determinants of bank interest rate margins: A panel approach for some Balkan countries
Pristina, Kosovo
Studying interest rates has always been in focus of researches. Loans are the main source of funds for businesses and individuals, especially in the Balkan countries. The main problem is that high interest rate margins can indicate many factors, such as: The informal economy, problems with the cadaster system, an ineffective job of courts, the inability of Central Banks to inject liquidity, weaknesses in the quality of financial reporting of businesses, non-performing loans. It looks like all these problems are in favor of banks, by maximizing their profit. It is well known that the intermediary role of bank is to provide the best prosperity for society, preferably at the lowest possible costs. The high level of interest rate spread is an indicator of inefficiency, excessive risk taking and lack of competition. This study aims to measure the effects of the banking, market and macroeconomic structure on the net interest rate spread of the Balkan countries, such as Albania, Kosovo, Macedonia, Bosnia and Herzegovina, and Serbia, for seven years. According with this, the evaluation is made from two tips of methods: statistical and regression analysis. In the end, I can conclude that the net interest margin is influenced by maintaining high levels of capital, non-performing loans, operating expenses and bank capital ownership. Other factors that affect it are bank size, liquidity risk and portfolios performance. Macroeconomic components such as: Market Structure and Gross Domestic Product are assessed without impact. The study of factors that may cause changes in interest rate margins is an interesting and widely dealt with by foreign literature. Such an approach may be useful for specific measures of economic policy, taking into account the prospect of EU integration and other researcher that want to expand this study.