High Lending Rates in Indonesia: Inflation Rates and Bank Inefficiencies

Insider Rates vs Outsider Rates in Bank Lending

When an inside lender has private information about a firm, there is an information asymmetry among lenders. The effect of this asymmetry on the relative rates for firms borrowing from an insider or outsider is not well established. In the Sharpe (1990) model, an inside lender with private information competes against an outside lender with public information. In a correction to the model, von ...

The Interactions between the Lending Rates, Deposit Rates and Money Market Rates

T he present paper investigates the impact of the financial crisis on the interaction between the lending rates, deposit rates and money market rates through the process of retail bank interest rate pass-through in the countries of the Euro area. Among our findings is the heterogeneity of bank rate adjustments across sectors, loans and deposits. That was mainly marked during the pre-...

Recent Developments in Interest Rates on Bank Lending

In implementing monetary policy, the Bank uses changes in the overnight interest rate on money market funds – the so-called cash rate – to influence the interest rate structure in the economy more generally, particularly the interest rates charged by intermediaries on loans. These interest rates normally move broadly in line with the cash rate, but in recent years they have fallen by significan...

An Empirical Analysis of Insider Rates vs. Outsider Rates in Bank Lending

This paper analyzes empirically the expected interest rates for insider (informed) vs. outsider (uninformed) lending. The analysis is based on a cross-section of small businesses that either borrow from an existing lender or borrow from a new lender. Existing lender rates proxy for insider rates and new lender rates proxy for outsider rates. The empirical results indicate that new lender rates ...

The Impact of High Inflation Rates