Authors

• Germán López-Espinosa(glespinosa@unav.es)
  Department of Business Administration, University of Navarra
• Antonio Moreno(antmoreno@unav.es)
  Department of Economics and Quantitative Methods, University of Navarra
• Fernando Pérez de Gracia(fgracia@unav.es)
  Department of Economics and Quantitative Methods, University of Navarra

Abstract
This paper re-examines the determinants of Net Interest Margin (NIM) in the banking industries of 15 developed and emerging economies. It presents three main contributions with respect to previous studies: first, we analyze the determinants of NIM in the years leading to the 2008 financial crisis; second, we account for the role of different accounting standards across countries; third, we use multi-way cluster estimation methodologies which control for cross-sectional and time-series dependence in macroeconomic and banking variables. We find that the introduction of International Financial Reporting Standards (IFRSs) contributed to lower NIM variations unexplained by standard accounting variables. Interest rate volatility is found to be positively and strongly related to NIM dynamics, whereas inflation risk is often found to be a relevant driver of NIM cross-country differences.

Classification JEL:G12, M41

Keywords:Net Interest Margin, Efficiency, Accounting Standards, Macro-Accounting, IFRSs, Financial Stability

Number of Pages:41

Creation Date:2011-10-21

Number:null/11