How do banks set interest rates?
By: Leonardo Gambacorta.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10295; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10295.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Interest rates -- Italy -- Econometric models.
Description: "The aim of this paper is to study cross-sectional differences in banks interest rates.  It adds to the existing literature in two ways.  First, it analyzes in a systematic way both micro and macroeconomic factors that influence the price setting behavior of banks.  Second, by using banks' prices (rather than quantities) it provides an alternative way to disentangle loan supply from loan demand shift in the bank lending channel' literature.  The results, derived from a sample of Italian banks, suggest that heterogeneity in the banking rates pass-through exists only in the short run.  Consistently with the literature for Italy, interest rates on shortterm lending of liquid and well-capitalized banks react less to a monetary policy shock.  Also banks with a high proportion of long-term lending tend to change their prices less.  Heterogeneity in the pass-through on the interest rate on current accounts depends mainly on banks' liability structure.  Bank's size is never relevant"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/25/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.