Conference Paper

How foreign participation and market concentration impact bank spreads: evidence from Latin America

Abstract: Increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors' market structures in developing countries. We analyze the impact of these factors on Latin American bank spreads during the late 1990s. Our results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs.

Keywords: Banks and banking, Foreign - Latin America;

Status: Published in Journal of money, credit, and banking, v. 36, no. 3, pt. 2, June 2004

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Proceedings

Publication Date: 2004

Pages: 511-542