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The impact of regulatory measures on commercial bank interest rates: A micro analysis of the Barbados case

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  • Kevin Greenidge
  • Wendell Mcclean

Abstract

This study estimates the impact on commercial banks' interest-rate behavior of the more pervasive regulatory measures adopted by the Central Bank of Barbados. The results indicate that the cash ratio, the stipulated government securities ratio, and the savings deposit rate floor significantly impacted the loan rate for every bank. Generally, the deposit rate for any given bank has been responsive to fewer policy variables than the loan rate. The loan rates, though generally responsive to all policy variables other than the bank rate, have exhibited very low elasticities. The results indicated that the ceiling on the average lending rate, when it existed, depressed loan rates by less than 1 percent on average. This is largely attributable to the Central Bank's policy of adjusting the ceiling in line with market trends. Copyright International Atlantic Economic Society 2000

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  • Kevin Greenidge & Wendell Mcclean, 2000. "The impact of regulatory measures on commercial bank interest rates: A micro analysis of the Barbados case," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 6(3), pages 544-556, August.
    • Handle: RePEc:kap:iaecre:v:6:y:2000:i:3:p:544-556:10.1007/bf02294971
    DOI: 10.1007/BF02294971
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    Cited by:

    1. Winston Moore & Roland Craigwell, 2002. "Market Power and Interest Rate Spreads in the Caribbean," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(4), pages 391-405.

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