The Influence of Banking Centralization on Depositors: Regional Heterogeneities in the Transmission of Monetary Policy

John Ashton, Andros Gregoriou

Research output: Contribution to journalArticle

Abstract

This study examines whether regionally and nationally branching banks set deposits interest rates differently. This assessment of the UK retail deposit market between 1992 and 2008 indicates that regional banks set deposit interest rates in a manner distinct to nationally branching banks. Changes in the market interest rate to retail rates are characterized by a non-linear mean-reverting process. Deposit interest rates offered by regional banks are lower, slower to respond to wholesale interest rate increases, and swiftly respond to wholesale interest rate falls, relative to national banks. This evi- dence is consistent with distinct monetary conditions existing in UK regions.
Original languageEnglish
JournalRegional Studies
Volume48
Issue number9
DOIs
Publication statusPublished - 9 Nov 2014

Keywords

  • Interest rate transmission
  • Market definition
  • Bank branching
  • Regional banks

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