Banking Sector Reform and Interest Rates in Transition Economies: Bank-Level Evidence from Kyrgyzstan

Martin Brown (), Maria Rueda Maurer (), Tamara Pak () and Nurlanbek Tynaev ()
Additional contact information
Maria Rueda Maurer: Swiss National Bank, Postal: Boersenstrasse 15, B. O. Box, CH-8022 Zurich, http://www.snb.ch
Tamara Pak: National Bank of the Kyrgyz Republic, Postal: Umetalieva Street 101, Bishkek 720040, Kyrgyzstan, http://www.nbkr.kg
Nurlanbek Tynaev: Ministry of Economy and Finance of the Kyrgyz Republic, http://www.minfin.kg/eng/

No 2007-7, Working Papers from Swiss National Bank

Abstract: We examine the impact of banking sector reforms on interest rates using bank-level data from Kyrgyzstan for 1998-2005. We find that increased confidence in the banking sector has contributed significantly to lowering interest rate levels, while the impact of lower intermediation costs, credit risk, and capital costs are negligible. Our results further suggest that the liberalization of the Kyrgyz financial sector has reduced both deposit and lending rates. Finally, we find that despite considerable restructuring, the Kyrgyz banking sector has not become more competitive. As a consequence, banks' interest rates have not fully responded to lower market rates following macroeconomic stabilization.

Keywords: Transition; Financial Sector Development; Interest Rates (search for similar items in EconPapers)
JEL-codes: G21 O16 P34 (search for similar items in EconPapers)
Date: Written 2007-04-30

Downloads: (external link)
http://www.snb.ch/n/mmr/reference/working_paper_20 ... _paper_2007_07.n.pdf Full text (text/plain)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Working Papers from Swiss National Bank
Contact information at EDIRC.
Series data maintained by Enzo Rossi ().