IMF Working Papers

Determinants of Interest Rate Spreads in Solomon Islands

By Nooman Rebei

June 12, 2014

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Nooman Rebei. Determinants of Interest Rate Spreads in Solomon Islands, (USA: International Monetary Fund, 2014) accessed November 21, 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

Bank interest rate spreads in Solomon Islands are high by regional standards. This paper examines the determinants of bank interest rates including bank specific, banking sector, macroeconomic, and legal indicators. The results show that the scale of operation, overhead costs, concentration index, and some macroeconomic variables (i.e., monetary policy rates and real growth) significantly influence interest rate margins. The paper particularly focus on the influence of the banking sector structure and finds strong evidence of bank collusion.

Subject: Bank credit, Banking, Commercial banks, Financial institutions, Income, Inflation, Legal support in revenue administration, Loans, National accounts, Personal income, Prices, Revenue administration

Keywords: Asia and Pacific, Bank, Bank concentration, Bank cost, Bank risk aversion, Bank specific, Bank spread, Banking spreads, Banks in Solomon Islands, Commercial banks, Correlated bank reaction, Credit risk, Financial intermediation, Income, Inflation, Interest, Interest rate, Legal support in revenue administration, Loans, Market power, Rate, Risk-averse bank, Solomon Islands, WP

Publication Details

  • Pages:

    24

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2014/105

  • Stock No:

    WPIEA2014105

  • ISBN:

    9781498303651

  • ISSN:

    1018-5941

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