The Moderating Role of Covid-19 on Determinants of Bank Spread


  • Dr. Khalil Ullah Mohammed Senior Assistant Professor, Business studies Department, Bahria University, Islamabad, Pakistan
  • Nudrat Fatima Lecturer, Management Studies Department, Bahria University Islamabad, Pakistan
  • Dr. Muhammad Imran Senior Assistant Professor, Business Studies Department, Bahria University Islamabad, Pakistan


Bank Spread, Covid-19, Net Interest Margins


This study investigates the moderating role of Covid-19 on the bank spreads in developing and developed economies. Based on the largest gross domestic product, the study employs unbalanced quarterly bank data of the largest five economies of Europe and South Asia using the Thomson Reuters DataStream database from 2016 to 2021. Generalized least squared dummy variable estimation is carried out. We find that typical determinants of bank spreads hold for both the developed and developing countries. Covid-19 is found to significantly impact bank spreads. However, we find that the impact in the case of Asia was a decrease in bank spreads while bank spreads were higher in the EU during covid-19. During the covid-19 crisis, the magnitudes of typical determinants increased for the case of South Asian banks. In the case, of EU banks the magnitude of bank spread determinants decreased. Evidence suggests an opportunity of arbitrage available to international banks to enter emerging markets and earn higher spreads. This would improve these countries' financial sectors, shrinking net interest margins and converging with those of developed countries.





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How to Cite

Mohammed, K. U., Fatima, N., & Imran, M. (2022). The Moderating Role of Covid-19 on Determinants of Bank Spread. Pakistan Social Sciences Review, 6(2), 538–553. Retrieved from