Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/180678
Authors: 
Sopp, Heiko
Year of Publication: 
2018
Series/Report no.: 
Bundesbank Discussion Paper 25/2018
Abstract: 
Within a Salop framework, this paper shows that banks' profit smoothing can explain incomplete pass-through of market rates to the rates of core deposits. Using time series data of deposit and lending rates of local German banks, this paper will show that local banks pass through return variations to their depositors. To the degree to which market rates influence new business lending rates, there is, therefore, an indirect channel through which market rates affect the rate of core deposits. In the absence of capital market alternatives for core deposits, this indirect channel explains why changes in the market rate affect the rate of core deposits only slowly and fractionally.
Subjects: 
interest rate pass-through
JEL: 
G21
E43
ISBN: 
978-3-95729-477-7
Document Type: 
Working Paper
Social Media Mentions:

Files in This Item:
File
Size
583.87 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.