Competition, transmission and bank pricing policies: Evidence from Belgian loan and deposit markets

Ferre De Graeve, Olivier De Jonghe and Rudi Vander Vennet

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper analyses the pass-through of money market rates to retail interest rates in the Belgian banking market using disaggregate data and allowing for heterogeneous price setting behavior. We find that 1) corporate loans are priced more competitively than consumer loans, 2) pass-through is higher for products with longer maturities, 3) EMU did not increase price competition, 4) bank behavior is consistent with the presence of menu costs, and 5) existing empirical evidence may underestimate adjustment speed. Furthermore, heterogeneous price setting among banks is driven by market power as well as the bank lending channel.

Keywords: pass-through; retail bank interest rates; heterogeneous panel cointegration; bank lending channel; asymmetry (search for similar items in EconPapers)
JEL-codes: C23 E43 E52 G21 L11 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2004-09
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Competition, transmission and bank pricing policies: Evidence from Belgian loan and deposit markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:04/261

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