Differences between Loans Granted by Commercial and Development Banks : A Cross-Sectional Analysis of Interest Rate Margins

This paper compares the effects of a set of factors that influence the interest rate margins charged on loans granted by commercial and development banks to private businesses in Mexico. Our database comprises more than 330 000 records of outstanding loans on December 2007. By means of WLS and ANOVAS, empirical evidence about differences between the effects of the studied determinants is found. The results suggest that development banks do not seem to mimic private banks, at least regarding the determination of interest rate margins, but that does not necessarily mean that they are solving a well-identified market failure