Vol 2, No 2 (2014)
Determinants of Net Interest Margins – the Case of Macedonia
Nadica Iloska
Abstract
The paper aims to examine the determinants of the net-interest margin (NIM), firstly theoretically, then empirically on the case of Macedonian banks. Since, it is generally agreed that a strong and healthy banking system is a prerequisite for sustainable growth, surviving negative shocks and maintaining financial stability, identifying the determinants that mostly influence bank profitability, expressed through NIM in Macedonia, is of great importance. The regression analysis employs bank level data for the period between 2008 and 2011 to determine the crucial factors that affect NIM. The results show that high net-interest margin and hence profitability tend to be positively associated with banks that employ quality and high-paid staff, and banks that concentrate a great part of their investments in loans. During the period under study, the results show that management’s behavior towards risk, the size of the bank and expenses management did not have a clear-cut or significant impact on bank profits.
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Keywords
Profitability; Net interest margin; Bank-specific factors; Multiple regression model
Publication information
Volume 2, Issue 2
Year of Publication: 2014
ISSN: 1857 - 8721
Publisher: EDNOTERA
How to cite
Iloska, N. (2014). Determinants of Net Interest Margins – the Case of Macedonia. Journal of Applied Economics and Business, Vol 2, No. 2, 17-36.