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Determinants of bank net interest margins in Fiji, a small Island developing state

Gounder, Neelesh N. and Sharma, P. (2012) Determinants of bank net interest margins in Fiji, a small Island developing state. Applied Financial Economics, 22 (19). pp. 1647-1654. ISSN 0960-3107

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Abstract

This article investigates the determinants of Net Interest Margins (NIM) of banks in Fiji, a Small Island Developing State (SIDS) in the South Pacific, over the period 2000 132010. Based mainly on the Ho and Saunders 19 (1981) dealership model and extensions thereto, this study uses a number of panel data estimation techniques to control for possible heterogeneity across banks and various assumptions about errors. Consistent with the theoretical model, NIM has a positive association with implicit interest payment, operating cost, market power and credit risk, and a negative association with the quality of management and liquidity risk. However, the association with bank capital and opportunity cost of required reserves do not conform to expectations. Policy implications are discussed.

Item Type: Journal Article
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics (FBE) > School of Economics
Depositing User: Neelesh Gounder
Date Deposited: 16 Sep 2013 10:28
Last Modified: 25 Jul 2016 15:30
URI: http://repository.usp.ac.fj/id/eprint/6666
UNSPECIFIED

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