What Drives the Interest Rate Margin Decline in EU Banking – The Case of Small Local Banks
Year: 2009
Author: Liebeg, David, Schwaiger, Markus S.
Credit and Capital Markets – Kredit und Kapital, Vol. 42 (2009), Iss. 4 : pp. 509–538
Abstract
What Drives the Interest Rate Margin Decline in EU Banking – The Case of Small Local Banks
Bank interest rate margins have been declining in most EU countries over the last decade. This paper investigates the determinants of bank interest rate margins drawing on a unique sample of small local banks in Austria. The reduction of small local banks interest rate margins is mainly driven by a combination of decreasing operating costs, enabling banks to charge lower margins, and increasing competition. In addition, there seems to be a tradeoff between small local banks margins and non-interest revenues. In contrast to findings in the literature we furthermore document a small, but significantly positive effect of relationship banking on interest rate margins. (JEL G21, E40, C33)
Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/kuk.42.4.509
Credit and Capital Markets – Kredit und Kapital, Vol. 42 (2009), Iss. 4 : pp. 509–538
Published online: 2009-10
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 30
Author Details
Liebeg, David Email
Schwaiger, Markus S. Email
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