Credit institutions' price policies and type of customer: impact on the monetary transmission mechanism
Series: Working Papers. 9605.
Author: María Cruz Manzano Frías and and Sofía Galmés Belmonte.
Topics: Credit | Financial institutions, Banks | Transmission of monetary policy | Economic situation | Quantitative methods.
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Abstract
This paper forms part of the research on the transmission of monetary policy via the interest rates of Spanish banks and savings banks, analysed from a disaggregated perspective. In this respect, it considers structural factors that cannot be taken into account in more aggregated studies, as for example the different characteristics of the markets where credit institutions operate.
The study's objective is to analyse the differences in the velocity and degree of responsiveness of lending and deposit rates to movements in interbank rates, according to the institutions' product specialisation. To this end, it explores the information available for each institution over the period 1991-1994, drawing on quarterly data.
The results obtained evidence of the differences between banks whose core business is traditional retail banking and more specialised banks, which are much more sensitive to market conditions, particularly on the deposit side.
In addition, the findings point towards more competitive behaviour in the establishment of lending rates than in the case of deposits.