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Interest rate dispersion in deposit and loan markets

  • Alfredo Martín-Oliver

    ()

    (Banco de España)

  • Vicente Salas-Fumás

    ()

    (Banco de España
    Universidad de Zaragoza)

  • Jesús Saurina

    ()

    (Banco de España)

This paper investigates the existence and determinants of interest rates dispersion in loans and deposits of Spanish banks. A unique feature of the research is that it covers a whole industry (thirty products and two hundred banks) from 1989 to 2003. We find that: i) interest rates dispersion is a persistent phenomena in loans and deposits markets; ii) the differences across products in the observed dispersion can be explained as a function of variables that affect the private net benefits of consumers' investment in information including search costs (frequency and volume of transactions); iii) interest rate dispersion is more sensible to product specific inflation than to changes in the interest rate of the economy; iv) regulation of standards of transparency by the Spanish Central Bank has been effective in reducing interest rate dispersion.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/05/Fic/dt0506e.pdf
File Function: First version, March 2005
Download Restriction: no

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0506.

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Length: 36 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:bde:wpaper:0506
Contact details of provider: Web page: http://www.bde.es/
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