Symmetric or Asymmetric Interest Rate Adjustments? Evidence from Southeastern Europe

The purpose of this paper is to examine how effectively the wholesale interest rates are transmitted to the retail rates and whether the interest rate passthrough is symmetric or asymmetric in Greece, Bulgaria, and Slovenia. The disaggregated general‐to‐specific methodology is applied for testing th...

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Bibliographic Details
Published in:Review of development economics 2011-05, Vol.15 (2), p.370-385
Main Authors: Karagiannis, Stelios, Panagopoulos, Yannis, Vlamis, Prodromos
Format: Article
Language:English
Subjects:
Hypotheses
Interest rates
Manycountries
Monetary policy
Studies
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Summary:The purpose of this paper is to examine how effectively the wholesale interest rates are transmitted to the retail rates and whether the interest rate passthrough is symmetric or asymmetric in Greece, Bulgaria, and Slovenia. The disaggregated general‐to‐specific methodology is applied for testing the symmetry hypothesis in these economies. It is evident from our results that variations exist across the countries examined regarding the monetary transmission process and the symmetry hypothesis alike. This can be interpreted as an indication of a different level of competition, development, and liberalization among the banking systems in these Southeastern European economies.
ISSN:1363-6669
1467-9361
DOI:10.1111/j.1467-9361.2011.00614.x