Implicit Interest on Demand Deposits
AbstractTraditionally, monetary theory assumes money bears zero interest. More recently, it has been recognized that banks implicitly pay interest through providing free services. In this paper, the implicit interest rate is estimated from two different sources. Implicit interest appears to be about one-half of what a competitive rate would be in the absence of the prohibition against explicit interest.
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- Richard Startz, . "Implicit Interest on Demand Deposits," Rodney L. White Center for Financial Research Working Papers 04-79, Wharton School Rodney L. White Center for Financial Research.
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