Determinants of bank interest rates and comparisons between Greece and the euro area
Despite their significant decline in recent years, bank interest rates in Greece continue to stand above euro area averages and in the case of some banking products the differential is considerable. This paper reviews the literature on the determinants of bank interest rates and spreads internationally, and identifies and discusses the key factors that may explain the differentials between Greek and euro area rates. Although these factors are to some extent related to inherent characteristics of the domestic banking system, they can be affected by appropriate policy measures that will support the further convergence of Greek rates.
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