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Banking sector output measurement in the euro area - a modified approach

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  • Colangelo, Antonio
  • Inklaar, Robert

Abstract

Banks do not charge explicit fees for many of the services they provide but the service payment is bundled with the offered interest rates. This output therefore has to be imputed using estimates of the opportunity cost of funds. We argue that rather than using the single short-term, low-risk interest rate as in current official statistics, reference rates should more closely match the risk characteristics of loans and deposits. For the euro area, imputed bank output is, on average, 24 to 40 percent lower than according to current methodology. This implies an average downward adjustment of euro area GDP (at current prices) between 0.16 and 0.27 percent. JEL Classification: E01, E44, O47

Suggested Citation

  • Colangelo, Antonio & Inklaar, Robert, 2010. "Banking sector output measurement in the euro area - a modified approach," Working Paper Series 1204, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20101204
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    File URL: http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1204.pdf
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    References listed on IDEAS

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    1. Michiel van Leuvensteijn & Jacob Bikker & Adrian van Rixtel & Christoffer Kok Sørensen, 2011. "A new approach to measuring competition in the loan markets of the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3155-3167.
    2. De Graeve, Ferre & De Jonghe, Olivier & Vennet, Rudi Vander, 2007. "Competition, transmission and bank pricing policies: Evidence from Belgian loan and deposit markets," Journal of Banking & Finance, Elsevier, vol. 31(1), pages 259-278, January.
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    1. repec:onb:oenbmp:y:2017:i:q2/17:b:3 is not listed on IDEAS

    More about this item

    Keywords

    Bank output; deposit interest rates; FISIM; loan interest rates; risk;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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