Intermediation margin and banking concentration in Colombia: an analysis for the period 2000-2017
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http://orcid.org/0000-0002-5653-5245
Abstract
Through the 90´s, reforms aimed at redirecting the future of banking in Colombia were promoted, resulting in a better consolidated market structure, not only for financial entities but also for Savings and Housing Corporations. In this understanding, this research aims to explain the relationship between the bank intermediation margin and the concentration of the sector in Colombia, from the hypothesis that a higher concentration leads banks to have a more important difference between the placement rate and the rate uptake. Concentration is measured with the Herfindahl-Hirschman Index of the country's banking assets, deducing that between 2000 and 2010 it grew significantly due to bank mergers and acquisitions, and since that year it tended to stabilize. To clearly show the relationship, an ARDL model is estimated, and it has positive long-term positive effects of bank concentration, inflation, the variation in real GDP and the reserve requirement on the interest rate differential.
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