Synchronisation and Staggering of Deposit Account Interest Rate Changes
AbstractThis study examines the frequency and form of deposit account interest rate change. Specifically, the question of whether depost rate change is synchronised with other banks or staggered at periodic intervals is addressed. Overall, evidence consistent with individual banks changing deposit interest rates in a staggered manner is recorded. Further, larger banks are seen to change interest rates in a more synchronised manner than smaller banks. Lastly, when banks offer multiple deposit accounts, these products' interest rates are generally changes simultaneously by individual banks. These findings extend the current understanding of deposit interest rate change, and indicate that UK deposit interest rate setting is relatively rigid.
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Bibliographic InfoPaper provided by Centre for Competition Policy, University of East Anglia in its series Working Papers with number 07-14.
Length: 21 pages
Date of creation: Jan 2007
Date of revision:
Retail banking; interest rates; staggering; synchronisation;
Find related papers by JEL classification:
- 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-2007-08-14 (All new papers)
- NEP-BAN-2007-08-14 (Banking)
- NEP-CBA-2007-08-14 (Central Banking)
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