Banking Sector Reform and Interest Rates in Transition Economies: Bank-Level Evidence from Kyrgyzstan
33 Pages Posted: 8 Mar 2007 Last revised: 29 May 2013
Date Written: September 26, 2008
Abstract
We examine the impact of financial sector reform on interest rate levels and spreads using bank-level data from Kyrgyzstan for 1998-2005. We find that besides macroeconomic stabilization, structural reforms to the banking sector have significantly contributed to lowering interest rate levels. In particular, our results suggest that foreign bank entry and efforts to consolidate the banking sector were important drivers in reducing deposit rates. In contrast, we find little impact of banking sector reform or macroeconomic stabilization on intermediation spreads.
Keywords: Transition, Financial Sector Development, Interest Rates
JEL Classification: G21, 016, P34
Suggested Citation: Suggested Citation
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