How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America

Increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors' market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads duri...

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Main Authors:	Martinez Peria, Maria Soledad, Mody, Ashoka
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS ACCOUNTING ACCOUNTING STANDARDS ACCOUNTS ADMINISTRATIVE COSTS BALANCE SHEET BANK ASSETS BANK CLOSURES BANK CREDIT BANK LENDING BANK LENDING RATES BANK LIQUIDITY BANK LOANS BANK REGULATION BANKING AUTHORITIES BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BONDS CAPITAL MARKETS CONSOLIDATION COST OF CAPITAL CREDIT RISK DEALERS DEFAULT RISK DEMONSTRATION EFFECTS DEPOSITS DEVELOPMENT ECONOMICS ECONOMICS EMPIRICAL EVIDENCE FINANCIAL CRISES FINANCIAL ECONOMICS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL MARKET LIBERALIZATION FINANCIAL NEEDS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN ENTRY INCOME INFLATION INTEREST RATE INTERNATIONAL FINANCIAL STATISTICS LATIN AMERICAN LIQUID ASSETS MARGINS MONETARY POLICY MONEY MARKET NET WORTH NEW ENTRANTS OFFSETTING OPERATING COSTS POLICY RESEARCH PRIVATE BANKS PROFITABILITY PUBLIC BANKS PURCHASES QUANTITATIVE ANALYSIS RESERVE REQUIREMENTS SAVINGS SECURITIES FOREIGN BANKS
Online Access:	http://documents.worldbank.org/curated/en/2004/02/5296843/foreign-participation-market-concentration-impact-bank-spreads-evidence-latin-america http://hdl.handle.net/10986/14205

id	okr-10986-14205
recordtype	oai_dc
spelling	okr-10986-142052021-04-23T14:03:21Z How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America Martinez Peria, Maria Soledad Mody, Ashoka FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS ACCOUNTING ACCOUNTING STANDARDS ACCOUNTS ADMINISTRATIVE COSTS BALANCE SHEET BANK ASSETS BANK CLOSURES BANK CREDIT BANK LENDING BANK LENDING RATES BANK LIQUIDITY BANK LOANS BANK REGULATION BANKING AUTHORITIES BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BONDS CAPITAL MARKETS CONSOLIDATION COST OF CAPITAL CREDIT RISK DEALERS DEFAULT RISK DEMONSTRATION EFFECTS DEPOSITS DEVELOPMENT ECONOMICS ECONOMICS EMPIRICAL EVIDENCE FINANCIAL CRISES FINANCIAL ECONOMICS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKET LIBERALIZATION FINANCIAL NEEDS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY INCOME INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL FINANCIAL STATISTICS LATIN AMERICAN LIQUID ASSETS MARGINS MONETARY POLICY MONEY MARKET NET WORTH NEW ENTRANTS OFFSETTING OPERATING COSTS POLICY RESEARCH PRIVATE BANKS PROFITABILITY PUBLIC BANKS PURCHASES QUANTITATIVE ANALYSIS RESERVE REQUIREMENTS SAVINGS SECURITIES FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS Increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors' market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads during the late 1990s. Their results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs. 2013-06-26T16:51:08Z 2013-06-26T16:51:08Z 2004-02 http://documents.worldbank.org/curated/en/2004/02/5296843/foreign-participation-market-concentration-impact-bank-spreads-evidence-latin-america http://hdl.handle.net/10986/14205 English en_US Policy Research Working Paper;No.3210 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS ACCOUNTING ACCOUNTING STANDARDS ACCOUNTS ADMINISTRATIVE COSTS BALANCE SHEET BANK ASSETS BANK CLOSURES BANK CREDIT BANK LENDING BANK LENDING RATES BANK LIQUIDITY BANK LOANS BANK REGULATION BANKING AUTHORITIES BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BONDS CAPITAL MARKETS CONSOLIDATION COST OF CAPITAL CREDIT RISK DEALERS DEFAULT RISK DEMONSTRATION EFFECTS DEPOSITS DEVELOPMENT ECONOMICS ECONOMICS EMPIRICAL EVIDENCE FINANCIAL CRISES FINANCIAL ECONOMICS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKET LIBERALIZATION FINANCIAL NEEDS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY INCOME INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL FINANCIAL STATISTICS LATIN AMERICAN LIQUID ASSETS MARGINS MONETARY POLICY MONEY MARKET NET WORTH NEW ENTRANTS OFFSETTING OPERATING COSTS POLICY RESEARCH PRIVATE BANKS PROFITABILITY PUBLIC BANKS PURCHASES QUANTITATIVE ANALYSIS RESERVE REQUIREMENTS SAVINGS SECURITIES FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS
spellingShingle	FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS ACCOUNTING ACCOUNTING STANDARDS ACCOUNTS ADMINISTRATIVE COSTS BALANCE SHEET BANK ASSETS BANK CLOSURES BANK CREDIT BANK LENDING BANK LENDING RATES BANK LIQUIDITY BANK LOANS BANK REGULATION BANKING AUTHORITIES BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BONDS CAPITAL MARKETS CONSOLIDATION COST OF CAPITAL CREDIT RISK DEALERS DEFAULT RISK DEMONSTRATION EFFECTS DEPOSITS DEVELOPMENT ECONOMICS ECONOMICS EMPIRICAL EVIDENCE FINANCIAL CRISES FINANCIAL ECONOMICS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKET FINANCIAL MARKET LIBERALIZATION FINANCIAL NEEDS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY INCOME INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL FINANCIAL STATISTICS LATIN AMERICAN LIQUID ASSETS MARGINS MONETARY POLICY MONEY MARKET NET WORTH NEW ENTRANTS OFFSETTING OPERATING COSTS POLICY RESEARCH PRIVATE BANKS PROFITABILITY PUBLIC BANKS PURCHASES QUANTITATIVE ANALYSIS RESERVE REQUIREMENTS SAVINGS SECURITIES FOREIGN BANKS FINANCIAL INTERMEDIATION INTEREST RATES SPREAD SPILLOVER EFFECTS INTEREST MARGINS MARKET CONCENTRATION INTEREST INCOME PAYMENTS MERGERS & ACQUISITIONS LIQUID ASSET PORTFOLIOS Martinez Peria, Maria Soledad Mody, Ashoka How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
geographic_facet	Latin America & Caribbean
relation	Policy Research Working Paper;No.3210
description	Increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors' market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads during the late 1990s. Their results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs.
format	Publications & Research :: Policy Research Working Paper
author	Martinez Peria, Maria Soledad Mody, Ashoka
author_facet	Martinez Peria, Maria Soledad Mody, Ashoka
author_sort	Martinez Peria, Maria Soledad
title	How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
title_short	How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
title_full	How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
title_fullStr	How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
title_full_unstemmed	How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America
title_sort	how foreign participation and market concentration impact bank spreads: evidence from latin america
publisher	World Bank, Washington, D.C.
publishDate	2013
url	http://documents.worldbank.org/curated/en/2004/02/5296843/foreign-participation-market-concentration-impact-bank-spreads-evidence-latin-america http://hdl.handle.net/10986/14205
_version_	1764430726835470336

How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America

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