| dc.description.abstract | The effects of the financial sector on GDP development and the factors that
govern the interest rate spread were analyzed in this article. A more streamlined
financial system is represented by a narrow gap between loan and deposit rates. We
contend that spreads, as opposed to net interest margins, are more accurate cross
country indicators of banking sector efficiency. We provide both theoretical and
empirical support for the spread as a potentially useful indicator of productivity. The
spread is a metric of financial intermediation and has a strong inverse relationship to
other common indicators of this process. Contrary to hypothesis H2, the models that
were examined throughout the whole time period found no meaningful correlation
between the bank interest rate spread and GDP growth. We also discovered that, like
other metrics of FI, the spread is determined by a handful of key factors. Spreads should
be reported by international bodies, and greater attention should be paid to this
efficiency metric. | en_US |
