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2016•Journals & Books Hosting (International Knowledge Sharing Platform)Open access

Determinants of Net Interest Margin: A Case Study of Bank XYZ in Indonesia

Harya Buntala Koostanto, Hermanto Siregar, Hendro Sasongko

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Abstract

High net interest margin are usually interpreted as an indicator of inefficiency which burden the economy through higher intermediation cost. Over the study 2007-2015 period, Bank XYZ has reform a declining ratio of net interest margin. This research is an unique case of Indonesian banking industries because the model figure in merger variable which is atypical for NIM research. During the downward trend of net interest margin. Using an error correction model, this study analyzes the determinants of net interest margin in bank XYZ. Results found that bank specific factors affect bank XYZ net interest margin. Furthermore operational cost, credit risk, and merger has an significant effect to net interest margin. Keywords: net interest margin, merger and acquisition JEL Classification: C32 , E43, G21

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What this paper is about

High net interest margin are usually interpreted as an indicator of inefficiency which burden the economy through higher intermediation cost. Over the study 2007-2015 period, Bank XYZ has reform a declining ratio of net interest margin. This research is an unique case of Indonesian banking industries because the model figure in merger variable which is atypical for NIM research. During the downward trend of net interest margin. Using an error correction model, this study analyzes the determinants of net interest margin in bank XYZ. Results found that bank specific factors affect bank XYZ net interest margin. Furthermore operational cost, credit risk, and merger has an significant effect to net interest margin. Keywords: net interest margin, merger and acquisition JEL Classification: C32 , E43, G21

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Available abstract

High net interest margin are usually interpreted as an indicator of inefficiency which burden the economy through higher intermediation cost. Over the study 2007-2015 period, Bank XYZ has reform a declining ratio of net interest margin. This research is an unique case of Indonesian banking industries because the model figure in merger variable which is atypical for NIM research. During the downward trend of net interest margin. Using an error correction model, this study analyzes the determinants of net interest margin in bank XYZ. Results found that bank specific factors affect bank XYZ net interest margin. Furthermore operational cost, credit risk, and merger has an significant effect to net interest margin. Keywords: net interest margin, merger and acquisition JEL Classification: C32 , E43, G21

Key concepts: Net interest margin, Margin (machine learning), Intermediation, Net interest income, Interest rate, Economics, Inefficiency, Econometrics

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