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Bank interest rates in a small European economy: Some exploratory macro level analyses using Finnish data

Karlo Kauko

No 9/2005, Research Discussion Papers from Bank of Finland

Abstract: This paper presents econometric analyses on the determination of bank deposit and lending rates using longitudinal Finnish data. Interest rate pass-through is very strong, possibly complete, in the case of lending rates; in the case of deposit rates the pass-through is far from complete, even in the long term.The monetary union has benefited customers by decreasing the average rate on new loans.Credit and interest rate risk premiums are clearly observable in banks' lending rates.The impact of money market rates on loan stock rates seems to have been non-linear; no obvious explanation for this phenomenon has been found. Key words: banking, interest rates JEL classification numbers: G21, E43, E44

JEL-codes: G21 E43 E44 (search for similar items in EconPapers)
Date: 2005-03-08
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