Author Affiliation, Ana.
Are interest rate spreads in Jamaica too large?: Views from within the financial sector
Social and Economic Studies
Date of Publication
The size of interest rate spreads, particularly for Jamaican commercial banks ,has been heavily debated in the media. This paper explores the issue by highlighting results of a comprehensive survey analysis of key stakeholders in the Jamaican financial sector , as to whether intrest rate spreads are too large, reasons for the size of the spreads, and suggestions for reducing them. It also seeks to ascertain whether the views highlighted can be validated by financial and economic data. It was found that while most finiancial institution managers argue that the spreads are justified by current economic, regulatory and social conditions, a few others, along with regulators and policy advisors are insistent that the spreads are fuelled by inefficiency and greed. Greater macro-economic stabability, reduced government borrowing on the local marget, hieghtened competition within the financial sector , and increased operational efficiency by financial institutions have been advocated.....