The Monetary Policy Regime and Banking Spreads in Barbados

26 Pages Posted: 31 Oct 2006

See all articles by Wendell Samuel

Wendell Samuel

International Monetary Fund (IMF) - Western Hemisphere Department

Laura Valderrama

International Monetary Fund - Monetary and Capital Markets Department

Date Written: September 2006

Abstract

The paper analyzes the determinants of banking spreads in Barbados, with a view to identifying the role of the monetary policy regime in explaining high spreads. The paper finds that interest rate spreads for Barbados are higher than would be suggested by its macroeconomic performance. Banking concentration and bank-specific variables, including bank size and provisions for nonperforming loans, do not have an important role in explaining variations in bank spreads. Rather, it appears that monetary policy variables, such as reserve requirements and capital controls, are the most important determinants of spreads.

Keywords: Interest rate spreads, Monetary policy regime

JEL Classification: E43, E52, D43

Suggested Citation

Samuel, Wendell and Valderrama, Laura, The Monetary Policy Regime and Banking Spreads in Barbados (September 2006). IMF Working Paper, Vol. , pp. 1-26, 2006. Available at SSRN: https://ssrn.com/abstract=941273

Wendell Samuel

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Laura Valderrama (Contact Author)

International Monetary Fund - Monetary and Capital Markets Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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