This paper examines the determinants of commercial bank retail interest rate pass-through. While providing empirical evidence for interest rate pass-through across countries, based on a panel data model for 122 countries, we observe that retail interest rate adjustment is related to a number of macroeconomic, financial/banking as well as institutional/governance factors. Amongst these, the level of financial market development, banking sector market power and central bank transparency remain key factors. These results are robust for different sub-samples of countries accounting for cross-country heterogeneity and provide important policy implications for central banks in the conduct of monetary policy.
|Number of pages||20|
|Journal||Journal of International Financial Markets, Institutions and Money|
|Publication status||Published - 1 Nov 2016|
- GMM estimates
- Monetary policy transmission
- Panel data
- Retail interest rates