EconPapers    
Economics at your fingertips  
 

Bank efficiency and interest rate pass-through: Evidence from Czech loan products

Tomas Havranek (), Zuzana Irsova () and Jitka Lesanovska

Economic Modelling, 2016, vol. 54, issue C, 153-169

Abstract: An important component of monetary policy transmission is the pass-through from financial market interest rates, directly influenced or targeted by central banks, to the rates that banks charge firms and households. Yet the available evidence on the strength and speed of the pass-through is mixed. We examine the pass-through mechanism using a unique data set of Czech loan and deposit products and focus on bank-level determinants of pricing policies, especially cost efficiency, which we estimate employing both stochastic frontier and data envelopment analysis. Our main results are threefold: First, the long-term pass-through was close to complete for most products before the financial crisis, but has weakened considerably afterward. Second, banks that provide high rates for deposits usually charge high loan markups. Third, cost-efficient banks tend to smooth loan rates for their clients.

Keywords: Monetary transmission; Cost efficiency; Bank pricing policies; Stochastic frontier analysis; Data envelopment analysis (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999316000080
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Bank Efficiency and Interest Rate Pass-Through: Evidence from Czech Loan Products (2015) Downloads
Working Paper: Bank Efficiency and Interest Rate Pass-Through: Evidence from Czech Loan Products (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:54:y:2016:i:c:p:153-169

DOI: 10.1016/j.econmod.2016.01.004

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-08-06
Handle: RePEc:eee:ecmode:v:54:y:2016:i:c:p:153-169