Testing the law of one price in retail banking: An analysis for Colombia using a pair-wise approach
AbstractWe apply a pair-wise approach to test the law of one price for deposit (lending) rates in Colombia. We find that when banks are of different size deposit rates adjust quickly, suggesting a competitive environment. By contrast, lending rates adjust rapidly when banks are of similar size, supporting market segmentation.
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Bibliographic InfoPaper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 733.
Date of creation: Sep 2012
Date of revision:
Law of one price; retail interest rates; Colombia. Classification JEL: G21.;
Other versions of this item:
- Iregui, Ana María & Otero, Jesús, 2013. "Testing the law of one price in retail banking: An analysis for Colombia using a pair-wise approach," Economics Letters, Elsevier, vol. 118(1), pages 29-32.
- Ana María Iregui & Jesús Otero, 2012. "Testing the law of one price in retail banking: An analysis for Colombia using a pair-wise approach," BORRADORES DE ECONOMIA 009981, BANCO DE LA REPÚBLICA.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-BAN-2012-09-30 (Banking)
- NEP-COM-2012-09-30 (Industrial Competition)
- NEP-LAM-2012-09-30 (Central & South America)
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