The Role of Net Interest Margin in Improving Banks’ Asset Structure and Assessing the Stability and Efficiency of their Operations

摘要

Against the background of the growing diversity of financial instruments, technological progress and increasing interconnectedness of financial institutions, ensuring the stability of the banking sector has become an important task for economic policy in every country. This paper shows that net interest margin is the most appropriate criterion for evaluating the effectiveness and stability of banks’ operations. It is superior to the return on assets in illustrating how successfully a bank manages its interest bearing assets. The author analyzes banking sectors in the Baltic countries, the Euro Area as well as the United States and their management strategies, as well as indicators of their operations to show that net interest margin is one of the most important criteria for asset structure optimization.