Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?

Using a unique bank-level data set on the Ugandan banking system during 1999-2005, the authors explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, they do not find a robust and economically significant relationship b...

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Main Authors:	Beck, Thorsten, Hesse, Heiko
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE SELECTION AGRICULTURE ASYMMETRIC INFORMATION BAD DEBT BALANCE SHEET INFORMATION BANK CAPITAL BANK PRIVATIZATION BANK REGULATION BANK SIZE BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BENCHMARK COMMERCIAL BANKS COMPETITIVENESS COUNTRY COMPARISONS DEPOSIT ACCOUNTS DEPOSITORS DEPOSITS EARNING ASSETS EMPIRICAL ANALYSIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL SECTOR FINANCIAL SECTOR REFORM FINANCIAL SYSTEMS FIXED ASSETS FOREIGN BANKS FOREIGN OWNERSHIP FUTURE RESEARCH GDP INCOME STATEMENTS INFLATION INFLATION RATE INFLATION RATES INSIDER TRANSACTIONS INTEREST COSTS INTEREST INCOME INTEREST MARGIN INTEREST RATE INTEREST RATES LATIN AMERICAN LIQUID ASSETS LIQUIDITY LIQUIDITY RATIO LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MARGINAL COST MICROFINANCE MORAL HAZARD NATIONALIZATION NET INTEREST MARGIN OPERATING COSTS OVERHEAD COSTS OWNERSHIP STRUCTURE PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS POSITIVE EFFECTS PRIVATIZATION PROFITABILITY REAL GDP RESOURCE MOBILIZATION RETURN ON ASSETS RISK PREMIUM RISK PREMIUMS ROA SAVINGS SECURITIES SHAREHOLDERS SMALL BANKS STATEMENT SUB-SAHARAN AFRICA TRANSACTION COSTS TRANSPORT TREASURY BILL VOLATILITY
Online Access:	http://documents.worldbank.org/curated/en/2006/10/7105070/bank-efficiency-ownership-market-structure-interest-spreads-so-high-uganda http://hdl.handle.net/10986/9270

id	okr-10986-9270
recordtype	oai_dc
spelling	okr-10986-92702021-04-23T14:02:41Z Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda? Beck, Thorsten Hesse, Heiko ADVERSE SELECTION AGRICULTURE ASYMMETRIC INFORMATION BAD DEBT BALANCE SHEET INFORMATION BANK CAPITAL BANK PRIVATIZATION BANK REGULATION BANK SIZE BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BENCHMARK COMMERCIAL BANKS COMPETITIVENESS COUNTRY COMPARISONS DEPOSIT ACCOUNTS DEPOSITORS DEPOSITS EARNING ASSETS EMPIRICAL ANALYSIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL SECTOR FINANCIAL SECTOR REFORM FINANCIAL SYSTEMS FIXED ASSETS FOREIGN BANKS FOREIGN OWNERSHIP FUTURE RESEARCH GDP INCOME STATEMENTS INFLATION INFLATION RATE INFLATION RATES INSIDER TRANSACTIONS INTEREST COSTS INTEREST INCOME INTEREST MARGIN INTEREST RATE INTEREST RATES LATIN AMERICAN LIQUID ASSETS LIQUIDITY LIQUIDITY RATIO LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MARGINAL COST MICROFINANCE MORAL HAZARD NATIONALIZATION NET INTEREST MARGIN OPERATING COSTS OVERHEAD COSTS OWNERSHIP STRUCTURE PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS POSITIVE EFFECTS PRIVATIZATION PROFITABILITY REAL GDP RESOURCE MOBILIZATION RETURN ON ASSETS RISK PREMIUM RISK PREMIUMS ROA SAVINGS SECURITIES SHAREHOLDERS SMALL BANKS STATEMENT SUB-SAHARAN AFRICA TRANSACTION COSTS TRANSPORT TREASURY BILL VOLATILITY Using a unique bank-level data set on the Ugandan banking system during 1999-2005, the authors explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, they do not find a robust and economically significant relationship between privatization, foreign bank entry, market structure, and banking efficiency. Similarly, macroeconomic variables can explain little of the over-time variation in bank spreads. Bank-level characteristics, on the other hand, such as bank size, operating costs, and composition of loan portfolio explain a large proportion of cross-bank, cross-time variation in spreads and margins. However, time-invariant bank-level fixed effects explain the largest part of bank variation in spreads and margins. Further, the authors find tentative evidence that banks targeting the low end of the market incur higher costs and therefore higher margins. 2012-06-26T18:10:11Z 2012-06-26T18:10:11Z 2006-10 http://documents.worldbank.org/curated/en/2006/10/7105070/bank-efficiency-ownership-market-structure-interest-spreads-so-high-uganda http://hdl.handle.net/10986/9270 English en_US Policy Research Working Paper; No. 4027 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Uganda
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVERSE SELECTION AGRICULTURE ASYMMETRIC INFORMATION BAD DEBT BALANCE SHEET INFORMATION BANK CAPITAL BANK PRIVATIZATION BANK REGULATION BANK SIZE BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BENCHMARK COMMERCIAL BANKS COMPETITIVENESS COUNTRY COMPARISONS DEPOSIT ACCOUNTS DEPOSITORS DEPOSITS EARNING ASSETS EMPIRICAL ANALYSIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL SECTOR FINANCIAL SECTOR REFORM FINANCIAL SYSTEMS FIXED ASSETS FOREIGN BANKS FOREIGN OWNERSHIP FUTURE RESEARCH GDP INCOME STATEMENTS INFLATION INFLATION RATE INFLATION RATES INSIDER TRANSACTIONS INTEREST COSTS INTEREST INCOME INTEREST MARGIN INTEREST RATE INTEREST RATES LATIN AMERICAN LIQUID ASSETS LIQUIDITY LIQUIDITY RATIO LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MARGINAL COST MICROFINANCE MORAL HAZARD NATIONALIZATION NET INTEREST MARGIN OPERATING COSTS OVERHEAD COSTS OWNERSHIP STRUCTURE PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS POSITIVE EFFECTS PRIVATIZATION PROFITABILITY REAL GDP RESOURCE MOBILIZATION RETURN ON ASSETS RISK PREMIUM RISK PREMIUMS ROA SAVINGS SECURITIES SHAREHOLDERS SMALL BANKS STATEMENT SUB-SAHARAN AFRICA TRANSACTION COSTS TRANSPORT TREASURY BILL VOLATILITY
spellingShingle	ADVERSE SELECTION AGRICULTURE ASYMMETRIC INFORMATION BAD DEBT BALANCE SHEET INFORMATION BANK CAPITAL BANK PRIVATIZATION BANK REGULATION BANK SIZE BANKING CRISIS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BENCHMARK COMMERCIAL BANKS COMPETITIVENESS COUNTRY COMPARISONS DEPOSIT ACCOUNTS DEPOSITORS DEPOSITS EARNING ASSETS EMPIRICAL ANALYSIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL SECTOR FINANCIAL SECTOR REFORM FINANCIAL SYSTEMS FIXED ASSETS FOREIGN BANKS FOREIGN OWNERSHIP FUTURE RESEARCH GDP INCOME STATEMENTS INFLATION INFLATION RATE INFLATION RATES INSIDER TRANSACTIONS INTEREST COSTS INTEREST INCOME INTEREST MARGIN INTEREST RATE INTEREST RATES LATIN AMERICAN LIQUID ASSETS LIQUIDITY LIQUIDITY RATIO LOAN CLASSIFICATION LOAN LOSS PROVISIONS MACROECONOMIC CONDITIONS MARGINAL COST MICROFINANCE MORAL HAZARD NATIONALIZATION NET INTEREST MARGIN OPERATING COSTS OVERHEAD COSTS OWNERSHIP STRUCTURE PORTFOLIO PORTFOLIO COMPOSITION PORTFOLIOS POSITIVE EFFECTS PRIVATIZATION PROFITABILITY REAL GDP RESOURCE MOBILIZATION RETURN ON ASSETS RISK PREMIUM RISK PREMIUMS ROA SAVINGS SECURITIES SHAREHOLDERS SMALL BANKS STATEMENT SUB-SAHARAN AFRICA TRANSACTION COSTS TRANSPORT TREASURY BILL VOLATILITY Beck, Thorsten Hesse, Heiko Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
geographic_facet	Africa Uganda
relation	Policy Research Working Paper; No. 4027
description	Using a unique bank-level data set on the Ugandan banking system during 1999-2005, the authors explore the factors behind consistently high interest rate spreads and margins. While foreign banks charge lower interest rate spreads, they do not find a robust and economically significant relationship between privatization, foreign bank entry, market structure, and banking efficiency. Similarly, macroeconomic variables can explain little of the over-time variation in bank spreads. Bank-level characteristics, on the other hand, such as bank size, operating costs, and composition of loan portfolio explain a large proportion of cross-bank, cross-time variation in spreads and margins. However, time-invariant bank-level fixed effects explain the largest part of bank variation in spreads and margins. Further, the authors find tentative evidence that banks targeting the low end of the market incur higher costs and therefore higher margins.
format	Publications & Research :: Policy Research Working Paper
author	Beck, Thorsten Hesse, Heiko
author_facet	Beck, Thorsten Hesse, Heiko
author_sort	Beck, Thorsten
title	Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
title_short	Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
title_full	Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
title_fullStr	Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
title_full_unstemmed	Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?
title_sort	bank efficiency, ownership and market structure : why are interest spreads so high in uganda?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/10/7105070/bank-efficiency-ownership-market-structure-interest-spreads-so-high-uganda http://hdl.handle.net/10986/9270
_version_	1764406534059589632

Bank Efficiency, Ownership and Market Structure : Why Are Interest Spreads So High in Uganda?

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