A Model of Building Society Interest Rate Setting
This paper examines the interest rate setting behaviour of building societies since the breakdown of the interest rate cartel in 1984. Societies have faced increasing competition in the mortgage and savings market over this period, against a backdrop of radical regulatory change. The paper develops a profit-maximising model of societies on which econometric analysis is based. The empirical analysis indicates that libor drives the pricing on both sides of the balance sheet. The performance of the estimated equations was good, given the regulatory and behavioural change of the institutions and the turbulence of the housing market over this period. It is interesting that real side variables - such as house price volatility and unemployment - were found to be insignificant.
|Date of creation:||Jun 1994|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0)171 601 4030
Fax: +44 (0)171 601 5196
Web page: http://www.bankofengland.co.uk/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:boe:boeewp:22. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publications Team)
If references are entirely missing, you can add them using this form.