A longitudinal study of net interest margin by bank asset size: 1992–2005

With the consolidation in banking over the past 20 years, interest in the comparative performance of big and small banks intensified. This study expands this research and examines the profitability of intermediation (measured by net interest margin or NIM) through a longitudinal model that uses panel data. Banks are assigned to one of five asset classes for each year of the 1992–2005 period, and the classes serve as the panels. Results show that interest rate effects on NIM vary by asset class, but the presence of economic effects and fixed effects on NIM depends on the model's specifications. Copyright Springer 2007