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ID: 097133

Bank rent approach to understanding the development of the ban / Suzuki, Yasushi; Adhikary, Bishnu Kumar

Suzuki, Yasushi	Journal Article
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2010.

Summary/Abstract

This paper applies the 'bank rent' approach to understanding the development of the banking system in Bangladesh since its independence. The paper uses the financial restraint model as an analytical framework and argues that there still remains room for creating bank rents in order to change the current dreary performance of the banking system. The paper unearths a varied level of high nominal lending rates, high nominal spreads and too low or negative real spreads as per different clusters of banks both in the pre-liberalized and liberalized regime, and concludes that this persistent varied performance is largely the outcome of a high amount of non-performing loans, inefficiencies in managing credit risks, and fragmentation and distorted competition in the banking system. This varied level of performance of the banking clusters also results from the government's intervention in the activities of nationalized commercial banks and specialized banks for mediating credits to priority sectors at a subsidized rate. The paper suggests that a more coordinated use of monetary and fiscal policies is required with a view to creating appropriate rents for banks for redressing their current dismal performance.

Key Words

Bangladesh ; Banking System ; Banking Development ; Bank Rent ; Non - Performing Loans

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ID: 090110

Does financial intermediation development increase per capita i / Pan, Suwen; Rejesus, Roderick M; He, Xiurong

Pan, Suwen	Journal Article
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Publication

2009.

Summary/Abstract

This paper investigates the impacts of financial intermediary (or banking) development on village-level per capita income using a Chinese dataset for selected years between 1993 and 2006. The empirical results from a random effect regression model indicate that mean per capita income in rural villages follows an inverted U-shaped path as financial intermediation develops. However, using a pooled quantile regression approach, we find that median per capita income in rural villages follows a positive linear path, rather than an inverted U-shaped path, as financial intermediation develops. The positive linear effect of financial intermediary development is observed at the lower and higher ends of the conditional per capita income distribution. This suggests that development of financial intermediation in China might not have statistically significant differential effects in low-income or high-income rural villages.

Key Words

China ; Rural Areas ; Villages ; Financial Intermediation ; Per Capita Income ; Quantile Regression ;
Banking Development

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