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Synchronisation and Staggering of Deposit Account Interest Rate Changes

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  • John K. Ashton

    () (Centre for Competition Policy, University of East Anglia)

Abstract

This study examines the frequency and form of deposit account interest rate change. Specifically, the question of whether depost rate change is synchronised with other banks or staggered at periodic intervals is addressed. Overall, evidence consistent with individual banks changing deposit interest rates in a staggered manner is recorded. Further, larger banks are seen to change interest rates in a more synchronised manner than smaller banks. Lastly, when banks offer multiple deposit accounts, these products' interest rates are generally changes simultaneously by individual banks. These findings extend the current understanding of deposit interest rate change, and indicate that UK deposit interest rate setting is relatively rigid.

Suggested Citation

  • John K. Ashton, 2007. "Synchronisation and Staggering of Deposit Account Interest Rate Changes," Working Papers 07-14, Centre for Competition Policy, University of East Anglia.
  • Handle: RePEc:ccp:wpaper:wp07-14
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP07-14.pdf
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    Keywords

    Retail banking; interest rates; staggering; synchronisation;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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