The Determinants of Bank Interest Rate Margins in the Colombian Housing Credit Market

Durán-Vanegas, Juan David (2016): The Determinants of Bank Interest Rate Margins in the Colombian Housing Credit Market.

Abstract

This paper analyses the determinants of banking mortgage loan interest rate margins in the Colombian mortgage credit market focusing on the effects of market concentration and using a panel-econometric approach for the period Jan-2003 to Dic-2014. Results imply that interest rate margins are mainly explained by the volatility of long-run interest market rates and negatively associated to the level of market concentration. These findings are consistent with a modified version of the efficient-structure hypothesis which suggests that differences in efficiency create unequal market shares and allow firms to set lower prices. Further evidence is presented by the existence of a long-term relationship between mortgage interest rates and market concentration during the sample period.

• Item Type: MPRA Paper
• Language: English
• Keywords: Interest rate marings; Market structure; Housing finance
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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