Interest Rate Spreads in English-Speaking African Countries

Crowley, John

doi:10.5089/9781451866650.001

Cited by 43 publications

(40 citation statements)

References 19 publications

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“…This has increased competition among financial institutions, and introduced strong business practices, and risk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 J o u r n a l o f E c o n o m i c a n d M a n a g e m e n t S t u management systems which may be creating higher spreads (Bank of Ghana, 2007;Adu, et al, 2013;Ackah and Asiamah, 2014). Crowley (2007), Ben Naceur and Goaied (2008), and Garr and Kyereboah-Coleman (2013) provide similar results for sub-Saharan African countries, Tunisia and Ghana respectively.…”

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confidence: 65%

“…These arguments notwithstanding, spreads have also been found to be influenced by macroeconomic factors (see Randall, 1998;Franken, 2002, 2003;Tennant, 2006;Crowley, 2007;Folawewo, and Tennant, 2008;Sheriff and Amoako, 2014 Bawumia, et al, 2005;Aboagye et al, 2008;Kwakye, 2010;Garr and Coleman, 2013;Sarpong et al, 2013;Churchill et al, 2014;Sheriff and Amoako, 2014;AmuakwahMensah and Marbuah, 2015) the present paper differ from these ones for the following reasons. First, it introduces money growth and a measure of institutional quality in determining interest rate spread.…”

Section: Source: Authorsmentioning

confidence: 99%

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Macroeconomic determinants of interest rate spreads in Ghana

Obeng

Sakyi

2017

AJEMS

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Purpose The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013. Design/methodology/approach The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation. Findings The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run. Research limitations/implications The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads. Originality/value The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana.

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Section: Insert Table 4 Herementioning

confidence: 65%

Section: Source: Authorsmentioning

confidence: 99%

Macroeconomic determinants of interest rate spreads in Ghana

Obeng

Sakyi

2017

AJEMS

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“…A study by Afanasieff, Lhacer and Nakane (2002) suggest that macroeconomic variables are the most relevant factors explaining the behavior of bank interest rate spreads in Brazil. Crowley (2007) found that higher spreads are associated with lower inflation. Similarly, a study by Brock and Suarez (2000) shows that beyond bank specific variables, uncertainty in the macroeconomic environment facing banks appears to increase interest spreads.…”

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confidence: 99%

Determinants of Interest Rate Spread: Some Empirical Evidence from Kenya’s Banking Sector

Kiptui¹

2014

IBR

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This paper analyzes the role played by bank and industry-specific factors as well as macroeconomic variables in the determination of interest margins in Kenya's banking sector. Decomposition of the spread using income and balance sheet of the banking sector as a whole and panel data analysis of 39 commercial banks yielded consistent results which highlight the significant role played by bank and industry specific factors and macroeconomic variables in interest rate spread determination. It is shown that between 7 -10 per cent of the interest margin was attributable to operating costs. Moreover, a 1 per cent increase in operating costs translates to 0.38 per cent increase in interest margins for the sample of banks studied. In addition, a 1 per cent increase in non-performing loans leads to an upward adjustment of interest margins by 0.12 per cent. Macroeconomic factors also contribute to changes in the interest margin. A 1 per cent increase in Treasury bill rates leads to an upward adjustment of interest margins by 0.1 per cent. Likewise, a 1 per cent increase in GDP growth and exchange rate variability results in 0.05 and 0.06 per cent increase in interest spread respectively. In contrast, a 1 per cent increase in loans-liabilities ratio (reflecting degree of intermediation) results in interest margin reduction by 0.17per cent. The results therefore emphasize the need to improve banking sector efficiency, deal with non-performing loans and maintain general macroeconomic stability.

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“…However amendments to the Finance Bill 2014 were passed in August 2014 exempting it from having to pay VAT on aircraft and spare part imports. Interest rate is the price a borrower pays for the use of money they borrow from a lender or fee paid on borrowed assets (Crowley, 2007). KQ's exposure to market risk due to changes in interest rates primarily relates to its cash deposits and borrowings.…”

Section: Independent Variable Dependent Variable Figure 1: Conceptualmentioning

confidence: 99%

Influence of Economic Factors on Organizational Performance of Airlines: A Case Study Kenya Airways Ltd

Mwangi¹,

Wekesa²

2017

IOSR JHSS

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Abstract:-The airline businesses depends on the wellbeing of international trade and the stability of the environment in which they operate. Kenya Airways should take great interest in the macro-environmental forces of its markets both locally and internationally. Statistics indicate that Kenya Airways posted kes 25.7bn loss in the 2014/2015 financial year and this was largely attributed to change in the macro-environmental forces. The effect of macro-environmental forces on the organizational performance of the airline industry especially in Kenya has received little attention in academic research. This study sought to establish the influence of economic factors on organizational performance of Kenya Airways. This study adopted descriptive research design and was limited to two financial years, 2013/2014 and 2014/2015, due to resource constraints. The target population of this study was 245 staff working in Kenya Airways Finance department. Stratified random sampling was used to select 74 respondents. The researcher used a questionnaire as primary data collection instrument. Secondary data was collected from published materials and annual reports of Kenya Airways. Content analysis and descriptive analysis was employed. In addition, a multiple regression was used. The study established that economic factors influence the organizational performance of Kenya Airways Limited. The study also recommends that there is need for government and various policy makers to put in place policies that will improve the economic condition surrounding the airline industry.

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Interest Rate Spreads in English-Speaking African Countries

Cited by 43 publications

References 19 publications

Macroeconomic determinants of interest rate spreads in Ghana

Macroeconomic determinants of interest rate spreads in Ghana

Determinants of Interest Rate Spread: Some Empirical Evidence from Kenya’s Banking Sector

Influence of Economic Factors on Organizational Performance of Airlines: A Case Study Kenya Airways Ltd

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