Determinants of Interest Rate Spreads in Solomon Islands

Download or read book Determinants of Interest Rate Spreads in Solomon Islands written by Mr.Nooman Rebei and published by International Monetary Fund. This book was released on 2014-06-12 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.