A comparison between bank rates in Spain and in the euro area

The European Central Bank (ECB) and the Eurosystem national central banks (NCBs) have recently begun to publish new interest rate statistics for all the countries of the euro area relating to the retail deposit and lending rates of monetary financial institutions (MFIs). This information, suitably extended to include data on the outstanding amounts of these instruments as well as new business, enables the levels of these variables to be compared across Member States on a homogenous basis that was previously unavailable. It should be pointed out that, currently, only a short run of data is available (the new series go back to the beginning of 2003), and that some residual heterogeneity persists, despite the drive for harmonisation. However, in future these data may be used to assess the degree of integration and competition in different segments of the Spanish and euro area banking markets. This study makes a first approximation to some of these questions. More specifically, the prices, outstanding amounts and new business of Spanish and euro area MFIs for lending and deposit transactions in 2003 are compared. The interest rates analysed refer, unless expressly stated otherwise, to effective rates, which do not include charges. For those instruments for which it is possible, a comparison is also made of the charges applied in each case. These are approximated by the spread between the “annual percentage rates” (APRs), the calculation of which takes these expenses into consideration, and the effective rates. Following this introduction the article is divided into four sections. In the first two sections the differences between the Spanish and euro area markets in relation to lending and deposit transactions are compared. Section four examines charges, while section five sets out the main conclusions.