Financial Markets and Portfolio Management

, Volume 30, Issue 4, pp 371–396 | Cite as

Quantifying the components of the banks’ net interest margin

  • Ramona Busch
  • Christoph MemmelEmail author


Using unique data sets on German banks, we decompose their net interest margin and quantify the different components by estimating the costs of the various functions they perform. We investigate three major functions: liquidity and payment management for customers, bearing credit risk, and term transformation. For 2013, the costs of liquidity and payment management correspond, in the median, to 47% of the net interest margin, with bearing of credit risk and earnings from term transformation accounting for 12 and 37%, respectively.


Net interest margin Credit risk Term transformation Liquidity and payment management 

JEL Classification

G 21 


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Copyright information

© Swiss Society for Financial Market Research 2016

Authors and Affiliations

  1. 1.Deutsche BundesbankFrankfurtGermany

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