Paraguay Selected Issues

This Selected Issues paper analyses Paraguay’s effective interest spreads using various methodologies. Interest rate spreads in Paraguay continue to be some of the highest in Latin America. A series of bank crises in the late 1990s and early 2000s weakened the financial system and pushed up spreads....

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Bibliographic Details
Corporate Author: International Monetary Fund Western Hemisphere Dept
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2014
Series:IMF Staff Country Reports
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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300 |a 33 pages 
651 4 |a Paraguay 
653 |a Banks and banking, Foreign 
653 |a Payment Systems 
653 |a Credit 
653 |a Banks 
653 |a Banks and banking 
653 |a Regimes 
653 |a Deposit insurance 
653 |a Mortgages 
653 |a Personal Income, Wealth, and Their Distributions 
653 |a Money 
653 |a Standards 
653 |a Financial risk management 
653 |a Capital and Ownership Structure 
653 |a Credit risk 
653 |a Goodwill 
653 |a Macroeconomics 
653 |a Banking 
653 |a Financial Risk and Risk Management 
653 |a Financing Policy 
653 |a Financial Risk Management 
653 |a Depository Institutions 
653 |a Economic & financial crises & disasters 
653 |a Government and the Monetary System 
653 |a Commercial banks 
653 |a Dollarization 
653 |a Monetary economics 
653 |a Financial institutions 
653 |a Value of Firms 
653 |a Micro Finance Institutions 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Crisis management 
653 |a Financial Institutions and Services: Government Policy and Regulation 
653 |a Banks and Banking 
653 |a Monetary Systems 
653 |a Financial regulation and supervision 
653 |a Monetary policy 
653 |a Interest Rates: Determination, Term Structure, and Effects 
653 |a Money and Monetary Policy 
653 |a Financial services law & regulation 
653 |a Foreign banks 
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520 |a This Selected Issues paper analyses Paraguay’s effective interest spreads using various methodologies. Interest rate spreads in Paraguay continue to be some of the highest in Latin America. A series of bank crises in the late 1990s and early 2000s weakened the financial system and pushed up spreads. The analysis suggests that operational costs, rising profits, and the need to cover credit and liquidity risks are the main factors behind Paraguay’s effective spreads. Improving data quality and mechanisms for sharing credit information could contribute to reduced spreads. Although the empirical results suggested that banking concentration has not given rise to greater spreads, adding new banking entrants may lower margins by increasing competition within the sector