Determinants of Bank Interest Margins in Russia: Does Bank Ownership Matter?
Bank of Finland - Institute for Economies in Transition (BOFIT); Charles University in Prague - Department of Economics
International Monetary Fund (IMF)
March 12, 2012
Economic Systems, Vol. 35, No. 4, 2011
This paper analyzes interest margin determinants in the Russian banking sector with a particular emphasis on the bank ownership structure. Using unique bank-level data covering Russia’s entire banking sector for the 1999-2007 period, we find that the impact of a number of commonly used determinants such as market structure, credit risk, liquidity risk and size of operations differs across state-controlled, domestic-private and foreign-owned banks. At the same time, the influence of operational costs and risk aversion is homogeneous across ownership groups. The results overall suggest that the form of bank ownership needs to be considered when analyzing interest margin determinants.
Keywords: Bank interest margins, Financial intermediation, Russia
JEL Classification: G21, P34
Date posted: March 13, 2012