Transfer of the Reference Rate for Lending and Deposit Rates: The Case of Mexico, 1995-2013 Cover Image

Transfer of the Reference Rate for Lending and Deposit Rates: The Case of Mexico, 1995-2013
Transfer of the Reference Rate for Lending and Deposit Rates: The Case of Mexico, 1995-2013

Author(s): Guillermo Benavides- Perales, Isela Elizabeth Téllez- León, Francisco Venegas- Martínez
Subject(s): National Economy, Business Economy / Management, Economic policy, Transformation Period (1990 - 2010), Present Times (2010 - today)
Published by: Reprograph
Keywords: Econometric modeling; lending and deposit interest rates; monetary policy;

Summary/Abstract: This paper examines whether a lag in the adjustment of lending is and deposit interest rates due to changes in monetary policy rate. We use an asymmetric error correction model to study the responses of interest rates since the lending and deposit rates adjust with different dynamics to the equilibrium level due to changes in the reference rate. Specifically, the asymmetric model allows examining differences when the interest rates are on or below their equilibrium level. Finally, we find a statistically significant relationship between lending and borrowing rates with the reference rate; the relationship is positive and slightly higher for the lending rate than for the deposit rate.

  • Issue Year: X/2015
  • Issue No: 37
  • Page Range: 1159-1163
  • Page Count: 5
  • Language: English