The determinants of bank net interest margins: A panel evidence from South Asian countries

Md Shahidul Islam, Shin Ichi Nishiyama

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

This paper studies the determinants of net interest margins of banks (NIMs) in four South Asian countries (Bangladesh, India, Nepal and Pakistan) in the period 1997-2012 using panel data of 230 banks. The study is in line of Ho-Saunders (1981) dealership model and its later expansions but extended the model by adding new variable the relative size of the banks and also classifying the determinants of interest margins as bank specific, industry specific and macroeconomic specific variables. We found that liquidity and equity positions, required reserve and operating expenses to total asset ratios affect net interest margins positively while relative size of the banks, market power and economic growth affect inversely.

Original languageEnglish
Pages (from-to)501-514
Number of pages14
JournalResearch in International Business and Finance
Volume37
DOIs
Publication statusPublished - 2016 May 1

Keywords

  • Net interest margins
  • Non-performing loan
  • Spread

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Finance

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