scholarly journals The Factors Driving Interest Rate Spread of Commercial Banks, Empirical Evidence from Nepal

2020 ◽  
Vol 10 (1) ◽  
pp. 45-52
Author(s):  
Bishnu Prasad Bhattarai Bishnu Prasad Bhattarai ◽  
Keyword(s):  
Interest Rate ◽  
Empirical Evidence ◽  
Commercial Banks ◽  
Interest Rate Spread

scholarly journals THE DETERMINANTS OF INTEREST RATE SPREAD AMONG COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (5) ◽  
pp. 29
Author(s):  
Leah Njoroge ◽  
Mercy Warui ◽  
Catherine Mbogo ◽  
Margaret Chiera ◽  
Dr. Chogii
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Market Structure ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Banking Sector ◽  
Unique Contribution ◽  
High Interest Rate ◽  
Interest Rate Spread ◽  
The Interest Rate

Purpose: To establish the determinants of interest rate spread among commercial banks in Kenya. Methodology: The study utilized a descriptive survey research design. Findings: The results indicated that the commercial banking sector has witnessed a gradual rise in the Interest rate spread. Results also showed that the mean of market structure has been fluctuating with year (2010) being the lowest with mean of 4 and year (2012) being the highest with mean 12. Results also showed that there was no regulation from the year (2005) to the year (2009) but it was later adopted whereas regulations shoot steadily to mean of 1.0 in the year (2009) and remained in the same level the rest of the years. The regression results indicate that there is a positive and significant relationship between market structure, credit risk and interest spread. The regression results also indicated that there is a positive but insignificant relationship between access to information and interest spread. Further, the results indicated that there is a negative and significant relationship between regulation and interest spread. Unique contribution to theory, practice and policy: The study is important to the management of Commercial banks as it will provide an insight on the factors influencing interest rate spread among commercial banks in Kenya. The results of this study will provide information to policy makers and other stakeholders in the financial sector (especially the banks) to come up with strategies that help in dealing with the high interest rate spread experience in the banking sector and thus improve on the financial performance of the organisations. It may be used as a tool for persuading commercial banks to reduce their interest rates spread and hence increase their volume of business, which of course would compensate the loss in the interest rate spread. The study will also be invaluable to the government and CBK. This is because the monetary policy framework of Central Bank of Kenya and its implementation will be guided by a need to ensure, among others: realistic interest rate spreads that encourage financial deepening and a safe, sound, efficient and competitive banking system through discreet risk management. These findings therefore might influence the effectiveness of economic policies. The research results will also be important to scholars and researchers as it will add to the existing pool of knowledge.

scholarly journals Empirical Evidence of Asymmetric Interest Rate Pass-Through in Vietnam

2013 ◽  
Vol 218 ◽  
pp. 79-93
Author(s):  
BẢO NGUYỄN KHẮC QUỐC ◽  
NHỰT NGUYỄN HỮU HUY
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Empirical Evidence ◽  
Commercial Banks ◽  
Aggregate Demand ◽  
Explanatory Factors ◽  
Pass Through

This paper seeks evidence and explanatory factors of asymmetric relationship in interest rate pass-through in Vietnam. The results show that the capital and liquidity requirements of commercial banks are main causes of asymmetric interest rate pass-through in Vietnam. The research based on data from six commercial banks in Vietnam during the period 2009 ? 2012 shows that (i) Loan rates from capital constrained banks are higher than those from unconstrained banks; (ii) Pass-through from monetary policy rate to loan rates is not clear in both constrained and unconstrained banks; and (iii) Loan rates from capital constrained banks are more sensitive to changes in aggregate demand.

scholarly journals Interest Rate Spread and the Efficacy of Commercial Banks’ Loans and Advances in Nigeria

2020 ◽  
Vol 6 (3) ◽  
pp. 753-763
Author(s):  
Udeme Efanga ◽  
Ihemeje, J. C ◽  
Yamta H. A ◽  
Birawada Keyadi
Keyword(s):  
Interest Rate ◽  
Commercial Banks ◽  
Goodness Of Fit ◽  
Time Series Data ◽  
Unit Root Test ◽  
Series Data ◽  
Correlation Test ◽  
Distributed Lag ◽  
Interest Rate Spread ◽  
The Impact

Abstract: The main objective of this study is to analyze the impact of interest rate spread on the efficacy of commercial banks’ lending in Nigeria. Data were obtained from secondary sources; Central Bank of Nigeria Statistical bulletin of 2018 and International Monetary Fund, International Financial Statistics and data files. Unit root test on the time series data displayed a combination of 1(0) and 1(1) variables, the Autoregressive Distributed Lag (ARDL) Model was employed for data estimation. Several diagnostic tests such as auto-correlation test, Ramsey stability test, serial correlation test and test for heteroscedasticity were also carried out and they all confirmed the goodness of fit and validity of the model employed. Findings reveal that: interest rate spread impacted positively and significantly on commercial banks’ loans and advances in Nigeria. The study therefore concludes that interest rate spread impacted commercial banks’ loans and advances in Nigeria positively across the period covered by this study. The study recommend that commercial banks in Nigeria should maintain their current interest rate spread strategy, since it is working well for them and helping them realize a high demand for their loans and advances in Nigeria.

scholarly journals DETERMINANTS OF INTEREST RATE SPREAD AMONG COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (5) ◽  
pp. 75
Author(s):  
Leah Njoroge ◽  
Dr.Chogii Dr.Chogii
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Credit Risk ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Regression Coefficient ◽  
Secondary Data ◽  
P Value ◽  
Unique Contribution ◽  
Interest Rate Spread

Purpose: This study sought to find the determinant of interest rate spread among commercial banks in Kenya.Methodology: The study used a descriptive research design. The target population of this study included all the commercial banks in Kenya since the small number of population called for a census survey of all the banks. The study used secondary data which includes the governments’ publications, journals, banking survey reports, annual reports of the Commercial banks in Kenya and periodicals. Quantitative data was collected. Secondary data used to calculate interest rate spread was collected from the annual statements of the sampled commercial banks. The study used both descriptive and inferential statistics. The descriptive statistics included trend analysis, mean and standard deviation. The study used a pooled OLS regression model to analyze the relationship between the independent and dependent variables.Results: The regression results indicate that there is a positive and significant relationship between market structure and interest spread. This finding was supported by a regression coefficient of 0.200 (p value = 0.000). The reported p value was less than the critical p value of 0.05. The results also indicated that there is a positive and significant relationship between credit risk and interest spread. This finding was supported by a regression coefficient of 0.096 (p value = 0.008). The reported p value was less than the critical p value of 0.05. This implies that an increase in credit risk by one unit would result to an increase in the interest spread by 0.096 units. Further, the results indicate that there is a positive but insignificant relationship between access to information and interest spread. The regression results also indicated that there is a negative and significant relationship between regulation and interest spread. This finding was supported by a regression coefficient of -1.309 (p value = 0.000). The reported p value was less than the critical p value of 0.05.Unique contribution to theory, practice and policy: The study recommended that commercial banks should be encouraged to use the information from the credit reference bureaus so as to maintain a lower interest spread among Commercial banks in Kenya. The study also recommended that the central  bank should licence more CRBs which would assist the commercial banks in lowering the credit risk. the study recommended that the central bank should review the monetary policy and lower the T- bill (91 days). This would help to lower the interest spread among Commercial banks in Kenya.

scholarly journals Impact of Interest Rate Spread on Profitability in Nepalese Commercial Banks

2020 ◽  
Vol 10 (1) ◽  
pp. 73-81
Author(s):  
Chitra Bahadur Karki
Keyword(s):  
Interest Rate ◽  
Commercial Banks ◽  
Positive Impact ◽  
Secondary Data ◽  
Annual Reports ◽  
Fiscal Year ◽  
Optimum Level ◽  
Investment Bank ◽  
Interest Rate Spread ◽  
The Impact

The paper aims to examine the relationship between interest rate spread (IRS) and profitability and the impact of IRS on profitability of commercial banks in Nepal. Secondary data have been collected from the annual reports of Nepal investment bank ltd. from fiscal year 2066/67 to 2075/76. A regression technique has been used considering statistical package Minitab 16 version to analyze the data. The study reveals the positive impact of IRS upon the profitability of Nepal investment bank ltd. This study provides sufficient evidences to Nepalese commercial banks about the impact of their IRS on their profitability. The result of this study motivates to Nepalese commercial banks to understand the importance of IRS to raise profitability. Based on the findings, the study is useful to Nepalese commercial banks for making balance between deposit rate and lending rate and maintaining optimum level of interest rate spread to attract both depositors and debtors. This study is also useful to new researchers as a reference for conducting study on similar topic.

scholarly journals Assessing effects of Interest Rates Spread on Non-Performing Loans: A Case of Commercial Banks in Trans-Nzoia County, Kenya

2021 ◽  
pp. 22-36
Author(s):  
Lewis Agwata ◽  
Peter Somotwo ◽  
Martin Onsiro Ronald
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Bank Regulation ◽  
Credit Risk Management ◽  
Interest Rate Spread ◽  
In Trans ◽  
The Interest Rate ◽  
Training Programmes

In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research.  This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies. In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research.  This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies.

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