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

50 Pages Posted: 6 Mar 2012

See all articles by John Kevin Ashton

John Kevin Ashton

Bangor Business School; University of East Anglia (UEA)

Andros Gregoriou

University of East Anglia

Date Written: Febryayr 1, 2012

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 regional banks set deposit interest rates in a manner distinct to nationally branching banks. This deviation between changes in the market interest to retail interest rates is characterized by a non-linear mean reverting process. Deposit interest rates offered by regional banks also display lower levels, a slower response to wholesale interest rate increases and a swifter response to wholesale interest rate falls, relative to national banks. It is concluded this evidence is consistent with distinct monetary conditions existing in the UK regions.

Keywords: Interest rate transmission, Market definition, Bank Branching

JEL Classification: G21

Suggested Citation

Ashton, John Kevin and Gregoriou, Andros, The Influence of Banking Centralisation on Depositors: Regional Heterogeneities in the Transmission of Monetary Policy (Febryayr 1, 2012). Bangor Business School Research Paper No. 12/0005, Available at SSRN: https://ssrn.com/abstract=2017005 or http://dx.doi.org/10.2139/ssrn.2017005

John Kevin Ashton (Contact Author)

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Andros Gregoriou

University of East Anglia ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

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