Determinants of commercial bank retail interest rate adjustments: Evidence from a panel data model

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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.
Original languageEnglish
Pages (from-to)1-20
Number of pages20
JournalJournal of International Financial Markets, Institutions and Money
Publication statusPublished - 1 Nov 2016


  • GMM estimates
  • Monetary policy transmission
  • Panel data
  • Retail interest rates

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