Journal Description Editorial Committee How to Subscribe Forthcoming Articles Staff Papers Archive Copyright Information Use the free Adobe Acrobat Reader to view pdf files Colombia and the IMF Free Email Notification Receive emails when we post new
items of interest to you. |
|
|
Interest Spreads in Banking in Colombia, 1974-96 By Adolfo Barajas, Roberto Steiner, and Natalia Salazar
Full Text of this Article (PDF
210 K) Abstract: This paper examines the determinants of the high intermediation spread observed in the Colombian banking sector for over two decades. A reduced-form equation is estimated on the basis of a bank profit maximization model that permits a decomposition into operational costs, financial taxation, market power, and loan quality. Although the average spread did not change between the preliberalization (1974-88) and postliberalization (1991-96) periods, its composition did, with market power being significantly reduced and the responsiveness to loan quality increased. Colombia's progress in reducing operational costs and financial taxation and improving loan quality will determine whether it can narrow the spread. [JEL E43, G21, L13]
© 1999 International Monetary Fund
|