'Negative-For-Long' Interest Rates and Customer Deposit Rate

2021 ◽  
Author(s):  
Whelsy Boungou
Keyword(s):  
Interest Rates ◽  
Deposit Rate

scholarly journals Interest Rates and Foreign Investor Activity in Kenya: Evidence from Nairobi Securities Exchange

2020 ◽  
pp. 75-82
Author(s):  
Loice Koskei
Keyword(s):  
Interest Rates ◽  
Inflation Rate ◽  
Time Series Data ◽  
Multiple Regression Model ◽  
Series Data ◽  
Foreign Investor ◽  
National Bureau ◽  
Treasury Bills ◽  
Monthly Data ◽  
Deposit Rate

Interest rates play a key role in attracting foreign investor activity in the country. This study investigated the effect of interest rates on foreign investor activity at Nairobi Securities Exchange in Kenya. Monthly data was collected from Nairobi Securities Exchange, Central Bank of Kenya and Kenya National Bureau of Statistics. Time series data for eleven year period spanning from January 2009 to December 2019 was used.  The multiple regression model results disclosed that interest rates as measured by lending rate had a positive and statistically significant effect on foreign investor. Inflation rate results had a negatively but statistically significant effect on foreign investor. The results for exchange rate had a negative but statistically insignificant effect on foreign investor activity. The deposit rate results indicated a negative and statistically significant effect on foreign investor activity implying that commercial banks deposit rate has an effect on foreign investor activity. The results for 91-day treasury bills specified a positive and non-statistically insignificant relationship with foreign investor activity pointing that for 91- day treasury bills do not affect the foreign investor activity at Nairobi securities exchange in Kenya.

Symmetric and asymmetric adjustment of bank deposit interest rates: empirical evidence from Kenya

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moses Nzuki Nyangu ◽  
Freshia Wangari Waweru ◽  
Nyankomo Marwa
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Asymmetric Adjustment ◽  
Deposit Rate ◽  
Content Type ◽  
Long Run ◽  
Adjustment Speed ◽  
Short Run ◽  
Pass Through

PurposeThis paper examines the sluggish adjustment of deposit interest rate categories with response to policy rate changes in a developing economy.Design/methodology/approachSymmetric and asymmetric error correction models (ECMs) are employed to test the pass-through effect and adjustment speed of deposit rates when above or below their equilibrium levels.FindingsThe findings reveal an incomplete pass-through effect in both the short run and long run while mixed results of symmetric and asymmetric adjustment speed across the different deposit rate categories are observed. Collusive pricing arrangement behavior is supported by deposit rate categories that adjust more rigidly upwards than downwards, while negative customer reaction behavior is supported by deposit rate categories that adjust more rigidly downwards than upwards.Practical implicationsEven though the findings indicate an aspect of increased responsiveness over the period, the sluggish adjustment of deposit rates imply that monetary policy is still ineffective and not uniform across the different deposit rate categories.Originality/valueTo the best of the authors' knowledge, this is the first study to empirically examine both symmetric and asymmetric adjustment behavior of deposit interest rate categories in Kenya. The findings are key to policy makers as they provide insights on how long it takes to adjust different deposit rate categories to monetary policy decisions. In addition, the behavior of deposit rates partly explains why interest rates capping was imposed in Kenya in 2016.

Bank competition and interest rate pass-through in the BRICS

2014 ◽  
Vol 9 (4) ◽  
pp. 471-487 ◽  
Author(s):  
Gideon Fadiran
Keyword(s):  
South Africa ◽  
Interest Rate ◽  
Interest Rates ◽  
Research Output ◽  
Central Banking ◽  
Deposit Rate ◽  
Content Type ◽  
Reaction Theory ◽  
Pass Through ◽  
Customer Reaction

Purpose – The purpose of this paper is to examine and compare the interest rate pass-through among the Brazil, Russia, India, China and South Africa (BRICS) emerging markets. Design/methodology/approach – The paper reviews a general literature on interest rates pass-through by applying a cointegration and asymmetric mean adjustment lag (MAL) error correction methodology (ECM). Findings – A symmetric adjustment is found in Russia, China and South Africa's deposit rate, while an asymmetric adjustment is found in Brazil and India's deposit rate adjustments. The presence of a customer reaction theory is found in Brazil, India, China and South Africa's deposit rate adjustments, while a collusive pricing arrangement is found in Russia. From the lending rate adjustment, a collusive pricing arrangement was found in Brazil, China and South Africa, while a customer reaction theory was found in India and Russia. Research limitations/implications – The sample period used in the study covers a period starting from the formal recognition of BRIC (2001-2010), which limits the data length. Practical implications – The research output and implication can assist monetary policy makers, investors and consumers to monitor BRICS’ central banking, commercial banking and competition behaviour, individually and as a group. The BRICS are potentially heading towards a more financially integrated bloc as multilateral agreements among members increases. This is in the form of Letters of Credit and Memorandum of Understanding. These agreements should boost intra-BRICS financial transactions, investments and trade. Originality/value – This is, to the best of knowledge, the first analysis of BRICS interest rate pass-through using the asymmetric MAL ECM application.

scholarly journals The Influence Of Operational Cost On The Bank’s Profitability And The Welfare Of Its Clients: A Theoretical Approach

2011 ◽  
Vol 21 (1) ◽  
Author(s):  
Erotokritos Varelas ◽  
Koni Karpeti
Keyword(s):  
Interest Rates ◽  
Theoretical Approach ◽  
Optimal Level ◽  
Operational Cost ◽  
Deposit Rate ◽  
Time Deposits ◽  
Time Deposit ◽  
Lending Rate ◽  
The Way

This paper deals with the way the rate of operational cost, as a proportion of time deposits, affects the optimal level of a monopolistic bank’s profits as well as the utility of its clients. In particular we prove that the optimal level of banking profits is negatively related to the rate of operational cost, while changes of the latter affect negatively the time deposit rate and positively the lending rate. As a result of these changes in interest rates, the utility of both borrowers and depositors is proved diminished.

scholarly journals FINANCIAL DEEPENING AND INTEREST RATE RELATIONSHIP IN FACING THE ASEAN ECONOMIC COMMUNITY 2015: VECM AND PANEL DATA APPROACH

2020 ◽  
Vol 5 (2) ◽  
Author(s):  
Lukman Hakim
Keyword(s):  
Panel Data ◽  
Interest Rate ◽  
Interest Rates ◽  
Negative Impact ◽  
The Philippines ◽  
Financial Deepening ◽  
Economic Community ◽  
Deposit Rate ◽  
Asean Economic Community ◽  
The Interest Rate

The relationship of the financial deepening to the interest rate has become an important study for the Southeast Asia countries, especially preparation forentering the ASEAN Economic Community (AEC) in 2015. This study will explore the effect of interest rates on deposits and credit to the financial deepening in ASEAN 5. By using VECM showed that Indonesia, the Philippines and Singapore possessed a similar pattern where lending rates negatively affect financial deepening, while the deposit rate positive effect. In contrast to Malaysia and Thailand, deposit rates had a negative impact on financial depth, while the loan interest rate was positive. Meanwhile, using panel data for the ASEAN 5 showed that the effect of interest rates on loans to the depth of the financial sector is negative, whereas the effect of deposit rate was positive

scholarly journals The Implications of Interest Rates on Private Saving with Reference to Myanmar

2020 ◽  
Vol 8 (5) ◽  
pp. 1486-1492
Keyword(s):  
Interest Rates ◽  
Commercial Banks ◽  
Banking Sector ◽  
Descriptive Analysis ◽  
Foreign Bank ◽  
Annual Reports ◽  
Fiscal Year ◽  
Deposit Rate ◽  
Private Saving ◽  
Independent Variables

The private saving is one of the fundamentals for economic development and growth of the country. Thus, the main purpose of this paper is to analyze the effect of interest rates on private saving in Myanmar over the period from fiscal year 2013-14 Q1 to 2018 Q2. This study investigates the private saving of Myanmar’s banking sector which includes twenty seven private commercial banks, four State-owned banks and thirteen foreign bank branches. The quarterly data are obtained from secondary data sources collected from quarterly Financial Statistics Bulletin and annual reports of Central Bank of Myanmar, Statistical Year Books and Selected Monthly Economic Indicators published by CSO, Myanmar, as well as websites from commercial banks to investigate the effect of domestic interest rates on private saving. Inferential analysis including multiple regression analysis and correlation analysis as well as descriptive analysis are applied to examine the effect of domestic interest rates on private saving with the use of Statistical Package for Social Sciences (SPSS) software (version 25). The findings of the study reveal that all independent variables except from Treasury bill rate have significant impact on the savings while inflation and fixed deposit rate have adversely impact on savings. Among all independent variables, saving deposit rate is the most influent variable on attracting private saving. Therefore, the study concludes that policies for ensuring to adopt flexible interest rates structures and for maintaining reasonable inflation rate depending upon the macroeconomic conditions of the economy would be critical to mobilize private saving in Myanmar.

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