The determinants of net interest margins of commercial banks in Mainland China

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)41-53
Journal / PublicationEmerging Markets Finance and Trade
Issue number5
Publication statusPublished - Sep 2008


This paper studies empirically the determinants of Chinese commercial banks' net interest margins from 1996 to 2003. It applies an extension to the Ho and Saunders (1981) model to identify the elements affecting net interest margins. The results indicate that the determinants of net interest margins in the Chinese market include market competition structure, average operating costs, degree of risk aversion, transaction size, implicit interest payments, opportunity cost of reserve, and management efficiency. Copyright © 2008 M.E. Sharpe, Inc. All rights reserved.

Research Area(s)

  • Commercial banks, Determinants, Net interest margin