IMF Working Papers

Determinants of Credit Growth and Interest Margins in the Philippines and Asia

By Tatum Blaise Pua Tan

May 1, 2012

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Tatum Blaise Pua Tan. Determinants of Credit Growth and Interest Margins in the Philippines and Asia, (USA: International Monetary Fund, 2012) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Despite robust deposit growth, credit growth has been sluggish in the Philippines. We attribute this to legacy weaknesses in bank balance sheets, consumption-led economic growth, and relatively high net interest margins. Bank-level analysis suggests that interest margins in the Philippines rise with bank size, bank capitalization, foreign ownership, overhead costs and tax rates. Using bank-level data for a number of Asian economies, we find that higher growth, lower inflation, higher reserve requirements, greater banking sector development, smaller stock market development and lower government deficits reduce net interest margins, informing the policy debate on strengthening financial intermediation in the Philippines.

Subject: Bank credit, Banking, Commercial banks, Credit, Credit booms, Financial institutions, Loans, Money

Keywords: Bank capitalization, Bank Capitalization, Bank credit, Bank size, Central and Eastern Europe, Commercial banks, Credit, Credit booms, Credit growth, Deposit base, Fed fund rate, Financial system, Loans, Market share, Net interest margins, Philippines, Private sector, WP

Publication Details

  • Pages:

    25

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/123

  • Stock No:

    WPIEA2012123

  • ISBN:

    9781475503524

  • ISSN:

    1018-5941

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