Banking System's Practices Leading to Double Inflation in Economies.
The banking system can cause inflation in an economy in two ways: demand pull and cost push. This happens when the real GDP growth rate differs from the nominal deposit and lending rates. Depositors spending interest income on goods and borrowers paying interest expenses on goods not supported by GDP growth leads to inflation. By analyzing these factors, researchers found a link between inflation and deposit/lending rates over time. Their model outperformed traditional methods in predicting inflation trends.