Changes in determinants of the interest margin in today's economy

This study examined the interest margin following the significant drop in its contribution to credit institutions' total income. Balance sheet variables, income statement and annual report variables, and external variables were studied separately. Variables that had not previously been studied in the literature were considered, and determinants that had already been studied were revisited after the reduction in the interest margin. The diversification of investment in associated companies and investment in fixed and variable income are causes of this decrease in the interest margin. Higher fees and commissions offset this decrease. Greater size and market power have reduced the interest margin. Regulations stipulated in the Basel III Accord regarding liquidity may adversely affect the solvency ratio. Results were obtained using econometric analysis of panel data. The analysis consisted of four separate regressions: one for balance sheet variables, one for income statement and annual report variables, one for external factors and one for annual effects.