Economics, Econometrics and Finance
5 years ago

Interbank interest rates impact loan rates, revealing banking inefficiencies.

Politická ekonomie
Interbank Interest Rate Pass-Through into Client Interest Rates in the Condition of Slovak Republic (2004-2016)
Valéria Halamová, Kristína Kočišová

Paper Summary

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The article examines how changes in interbank interest rates affect the interest rates that banks offer to their clients in Slovakia from 2004 to 2016. The researchers used a method called cointegration error-correction model to analyze the relationship between different types of loan and deposit rates. They found that there are significant differences in how quickly changes in interbank rates are passed on to client rates, with loans being more responsive than deposits. The process of interest rate pass-through in Slovakia is relatively stable, but there are delays and incomplete transmission of changes in interbank rates to client rates.