Developments in Banks' Funding Costs and Lending Rates

Belinda Cheung

RBA Bulletin (Print copy discontinued), 2017, 45-50

Abstract: This article updates previous Reserve Bank research on the ways in which developments in the composition and pricing of banks’ debt funding have affected their overall cost of funds and influenced lending rates. Major banks’ outstanding funding costs and lending rates declined in 2016, following two reductions in the cash rate. However, lending rates and funding costs did not decline by as much as the cash rate. This was largely due to an increase in the cost of deposit funding, which reflected competition between financial institutions for deposits.

Keywords: bank funding costs; bank lending rates; major banks; Australian banks; interest rates; implied spread; funding composition (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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