Determinants of banks’ net interest margin in five South East Asian countries

South East Asian banking has different characteristics in each country and this affects the Net Interest Margin (NIM) acquired. Indonesian banks enjoy 5.4% NIM, while Singaporean banks only acquired 1.4% in the same period. This study aims to determine the various factors that affect NIM in five South East Asian countries, which are Indonesia, Malaysia, Thailand, Singapore and the Philippines. There will be 11 independent variables grouped into three factors, which are bank-specific, industry and macroeconomics. The study will use a linear regression model. The result shows that South East Asia’s NIM is affected significantly by relative size, credit risk, capital adequacy, diversification, industry concentration, short-term interest rate volatility and stock market capitalization. The study also concludes that capital markets and banks are both financial intermediaries that substitute for each other when their roles should be complementary in order to improve the respective country’s economic condition