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- Title
Factors Determining Net Interest Margins in Australia: Domestic and Foreign Banks.
- Authors
Williams, Barry
- Abstract
This study tests the application of the Ho and Saunders (1981) model of bank net interest margins (NIMs), and its subsequent developments, using Australian data. The core elements of this model apply in Australia. Bank market power is found to increase NIMs, consistent with McShane and Sharpe (1985) , with evidence of bank buying market share and mispricing for risk. Operating costs also have an important role in determining NIMs, together with implied payments and management quality. Bank NIMs are found to have fallen over the study period.
- Subjects
AUSTRALIA; BANKING industry; MARGINS (Futures trading); MARKET share; OPERATING costs; TOTAL quality management
- Publication
Financial Markets, Institutions & Instruments, 2007, Vol 16, Issue 3, p145
- ISSN
0963-8008
- Publication type
Article
- DOI
10.1111/j.1468-0416.2007.00122.x