Synchronisation and Staggering of Deposit Interest Rate Changes
CCP Working Paper No. 07-14
21 Pages Posted: 26 Jul 2007
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: Suggested Citation
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