Banks' Funding Costs and Lending Rates

Cameron Deans and Chris Stewart
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Cameron Deans: Reserve Bank of Australia
Chris Stewart: Reserve Bank of Australia

RBA Bulletin (Print copy discontinued), 2012, 37-43

Abstract: Over the past year, lending rates and funding costs have both fallen in absolute terms but have risen relative to the cash rate. The rise in funding costs, relative to the cash rate, reflects strong competition for deposits, particularly term deposits, and higher spreads on wholesale debt reflecting an increase in investors’ concerns about the global banking industry. While spreads have narrowed recently, they are still noticeably higher than they have been over the past couple of years. Over the past six months, lending rates have generally fallen by more than funding costs.

Keywords: funding costs; lending rates; interest rates; deposits; wholesale debt; net interest margin; funding composition; banks (search for similar items in EconPapers)
Date: 2012
References: View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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