Synchronisation and Staggering of Deposit Interest Rate Changes

CCP Working Paper No. 07-14

21 Pages Posted: 26 Jul 2007

See all articles by John Kevin Ashton

John Kevin Ashton

Bangor Business School; University of East Anglia (UEA)

Date Written: June 2007

Abstract

This study examines the frequency and form of deposit account interest rate change. Specifically, the question of whether deposit interest rate change is synchronised with other banks or staggered at periodic intervals is addressed. Overall, evidence consistent with individual banks changing deposit interest rates in a staggered manner is recorded. Further, larger banks are see to change interest rates in a more synchronised manner than smaller banks. Lastly, when banks offer multiple deposit accounts, these products' interest rates are generally changed simultaneously by individual banks. These findings extend the current understanding of deposit interest rate change, and indicate that UK deposit interest rate setting is relatively rigid.

Keywords: Retail banking, interest rates, staggering, synchronisation

JEL Classification: G21

Suggested Citation

Ashton, John Kevin, Synchronisation and Staggering of Deposit Interest Rate Changes (June 2007). CCP Working Paper No. 07-14, Available at SSRN: https://ssrn.com/abstract=1003129 or http://dx.doi.org/10.2139/ssrn.1003129

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

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