Abstract
This study investigates the impact of Operating Efficiency, Noninterest Income and risk on net interest margin (NIM) of Jordanian banks during the period 2007–2017 by applying the random effect model in a panel setting. Our results confirm that bankers are risk-averse; they require risk premiums by widening the spread whenever their risks are higher. Operating efficiency (Operating expenses to total assets) is highly significant with the expected positive sign. This may be due to lack of competition and requires additional measures by regulators such as licensing new banks. To examine this further, we find that concentration is significant and positively associated with bank spread. Likewise, since noninterest income helps reduce the margin, banks could improve their performance with better diversification. Such as providing consultancy services, cash management, leasing, venture capital financing, insurance (through subsidiaries), investment banking (underwriting) and trust services in addition to the off-balance sheet activities.
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Alzoubi, M., Salem, N. (2022). Bank Interest Rate Spread: Operating Expenses and Noninterest Income Beyond Risk. In: Yaseen, S.G. (eds) Digital Economy, Business Analytics, and Big Data Analytics Applications. Studies in Computational Intelligence, vol 1010. Springer, Cham. https://doi.org/10.1007/978-3-031-05258-3_40
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DOI: https://doi.org/10.1007/978-3-031-05258-3_40
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