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Meta-Analysis: Effect of central bank’s key policy rate on banks’ lending interest rates

Author

Listed:
  • Oleksandra Chmel
  • Valentyna Sinichenko
  • Daryna Pustovoit
  • Anton Shmihel

    (Kyiv School of Economics)

Abstract

The importance of the key policy rate is hard to underestimate. By lowering the policy rate, the central bank reduces the cost of borrowing, which stimulates investment and consumption. However, firms and consumers, who are the agents in the process, do not borrow directly from the central bank – they take out loans from commercial banks. Thus, in order to realize the central bank’s potential impact on the economy, it is important to analyses the first step of the pass-through: from the key policy rate to commercial lending rates. Is there a strong connection? The goal of our paper is to provide the answer to that question.

Suggested Citation

  • Oleksandra Chmel & Valentyna Sinichenko & Daryna Pustovoit & Anton Shmihel, 2019. "Meta-Analysis: Effect of central bank’s key policy rate on banks’ lending interest rates," Modern Economic Studies, Kyiv School of Economics, vol. 2(1), pages 2-11.
  • Handle: RePEc:kse:modern:v:2:y:2019:i:1:p:2-11
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    References listed on IDEAS

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    More about this item

    Keywords

    meta-analysis; key policy rate; lending rate; central bank;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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