COMMERCIAL LENDING RATES IN THE ECCU

Author(s): ERSON, KAMILAH; LEONCE, JANAI; (2011)

Created 25 Jul, 2011
Categories Working Papers
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This paper examines the degree to which lending rates of commercial banks in ECCU member countries are 'persistent' and as such are mark-up rates which take into account interest demand elasticity, non-performing loans, return on risk free international assets and lending cost in line with Khermaj 2003. The paper finds that in three countries no significant differences existed between calibrated lending rates and nominal rates providing some evidence in support of our main hypothesis. This finding was further strengthened by the evidence from liquidity preference curves constructed using a Lowess technique.

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