Determinants of commercial bank retail interest rate adjustments: Evidence from a panel data model

Anil Perera and Jayasinghe Wickramanayake

Journal of International Financial Markets, Institutions and Money, 2016, vol. 45, issue C, 1-20

Abstract: This paper examines the determinants of commercial bank retail interest rate pass-through. While providing empirical evidence for interest rate pass-through across countries, based on a panel data model for 122 countries, we observe that retail interest rate adjustment is related to a number of macroeconomic, financial/banking as well as institutional/governance factors. Amongst these, the level of financial market development, banking sector market power and central bank transparency remain key factors. These results are robust for different sub-samples of countries accounting for cross-country heterogeneity and provide important policy implications for central banks in the conduct of monetary policy.

Keywords: Retail interest rates; Monetary policy transmission; Panel data; GMM estimates (search for similar items in EconPapers)
JEL-codes: E43 E44 E52 E58 G28 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:45:y:2016:i:c:p:1-20

DOI: 10.1016/j.intfin.2016.05.006

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