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on Banking |
| By: | Heiko Hesse; Thorsten Beck |
| Abstract: | Using a unique bank-level dataset on the Ugandan banking system over the period 1999 to 2005, we explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, we do not find a robust and economically significant relationship between privatization, foreign bank entry, market structure and banking efficiency. Similarly, macroeconomic variables can explain little of the over-time variation in bank spreads. Bank-level characteristics, on the other hand, such as bank size, operating costs, and composition of loan portfolio, explain a large proportion of cross-bank, cross-time variation in spreads and margins. However, time-invariant bank-level fixed effects explain the largest part of bank-variation in spreads and margins. Further, we find tentative evidence that banks targeting the low-end of the market incur higher costs and therefore higher margins. |
| Keywords: | Foreign Bank Entry, Financial Sector Reform, Bank Efficiency, Financial Intermediation, Uganda |
| JEL: | G21 G30 O16 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:277&r=ban |
| By: | Merkl, Christian; Stolz, Stéphanie |
| Abstract: | Based on a quarterly regulatory dataset for German banks from 1999 to 2004, this paper analyzes the effects of banks’ regulatory capital on the transmission of monetary policy in a system of liquidity networks. The dynamic panel regression results provide evidence in favor of the bank capital channel theory. Banks holding less regulatory capital and less interbank liquidity react more restrictively to a monetary tightening than their peers. |
| Keywords: | monetary policy transmission, bank lending channel, bank capital channel, liquidity networks |
| JEL: | C23 E52 G21 G28 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:4771&r=ban |
| By: | Yuliya Demyanyk (Federal Reserve Bank of St. Louis); Charlotte Ostergaard (Norwegian School of Management and Norges Bank); Bent E. Sørensen (University of Houston and CEPR) |
| Abstract: | We estimate the effects of deregulation of U.S. banking restrictions on the amount of interstate personal income insurance during the period 1970–2001. Interstate income insurance occurs when personal income reacts less than one-to-one to state-specific shocks to output. We find that income insurance improved after banking deregulation, and that this effect is larger in states where small businesses are more important. We further show that the impact of deregulation is stronger for proprietors’ income than other components of personal income. Our explanation of this result centers on the role of banks as a prime source of small business finance and on the close intertwining of the personal and business finances of small business owners. Our analysis casts light on the real effects of bank deregulation, on the risk sharing function of banks, and on the integration of bank markets. |
| Keywords: | Financial deregulation, integration of bank markets, interstate risk sharing, small business finance. |
| Date: | 2006–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2006_09&r=ban |
| By: | De la Cruz, Javier; Stephanou, Constantinos |
| Abstract: | The objective of this policy paper is to identify and propose high-level legal and regulatory reforms to Colombia ' s financial system structure that would enhance efficiency and/or mitigate risks. Five specific and four general reforms are proposed and evaluated based on their compatibility with the aforementioned objectives, ease of implementation, impact, and consistency with international practice. Potential implications for supervision and competition, as well as likely criteria for developing a carefully sequenced reform roadmap, are also highlighted. |
| Keywords: | Banks & Banking Reform,Financial Intermediation,Corporate Law,Non Bank Financial Institutions,Financial Crisis Management & Restructuring |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4006&r=ban |
| By: | Charles Ou |
| Abstract: | Loan markets for most small business borrowers in the United States have become more competitive over the past decade, evidenced by the emergence of a nationwide market for credit lines and credit cards and the entry of large regional banks in local markets. However, the impact of increased competition on the cost of funds to small firms, as indicated by the rate spreads between small business rates and the rates paid by the banks’ best prime customers, is more difficult to assess because of data limitations. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:sba:wpaper:06ou&r=ban |
| By: | Judith A. Clarke (Department of Economics, University of Victoria); Nilanjana Roy (Department of Economics, University of Victoria); Marsha J. Courchane (ERSGroup, Washington DC) |
| Abstract: | That mortgage lenders have complex underwriting standards, often differing legitimately from one lender to another, implies that any statistical model estimated to approximate these standards, for use in fair lending determinations, must be misspecified. Exploration of the sensitivity of disparate treatment findings from such statistical models is, thus, imperative. We contribute to this goal. This paper examines whether conclusions from several bank-specific studies, undertaken by the Office of the Comptroller of the Currency, are robust to changes in the link function adopted to model the probability of loan approval and to the approach used to approximate the finite sample null distribution for the disparate treatment hypothesis test. We find that discrimination findings are reasonably robust to the range of examined link functions, which supports the current use of the logit link. Based on several features of our results, we advocate regular use of a resampling method to determine p-values. |
| Keywords: | Logit, Mortgage lending discrimination, Fair lending, Stratified sampling, Binary response, Semiparametric maximum likelihood, Pseudo log-likelihood, Profile log-likelihood, Bootstrapping |
| Date: | 2006–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:vic:vicewp:0604&r=ban |
| By: | Gine, Xavier; Karlan, Dean S. |
| Abstract: | Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group lending claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor, and enforce each other’s loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender’s overall profitability and the poor’s access to financial markets. The authors worked with a bank in the Philippines to conduct a field experiment to examine these issues. They randomly assigned half of the 169 pre-existing group liability ' centers ' of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that the conversion to individual liability does not affect the repayment rate, and leads to higher growth in center size by attracting new clients. |
| Keywords: | Banks & Banking Reform,Knowledge Economy,Banking Law,Education for the Knowledge Economy,Contract Law |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4008&r=ban |