IDEAS home Printed from https://ideas.repec.org/a/taf/applec/44y2012i29p3857-3876.html
   My bibliography  Save this article

Banking market integration in the SADC countries: evidence from interest rate analyses

Author

Listed:
  • M. J. Aziakpono
  • S. Kleimeier
  • H. Sander

Abstract

This study investigates the state, development and drivers of banking market integration in the member countries of the Southern African Development Community (SADC). A Principal Component Analysis (PCA) of national retail interest rates indicates increasing integration in loan and deposit markets. These integration processes are not developing uniformly and we can identify a convergence club. When investigating the interest rate pass-through from central bank onto retail rates for this convergence club, we find both, genuine and monetary-integration driven processes though the latter dominate. We thus conclude that a selective expansion of the Common Monetary Area (CMA) is possible.

Suggested Citation

  • M. J. Aziakpono & S. Kleimeier & H. Sander, 2012. "Banking market integration in the SADC countries: evidence from interest rate analyses," Applied Economics, Taylor & Francis Journals, vol. 44(29), pages 3857-3876, October.
    • Handle: RePEc:taf:applec:44:y:2012:i:29:p:3857-3876
    DOI: 10.1080/00036846.2011.583219
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2011.583219
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2011.583219?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dellas, Harris & Tavlas, George S., 2009. "An optimum-currency-area odyssey," Journal of International Money and Finance, Elsevier, vol. 28(7), pages 1117-1137, November.
    2. Fernandez-Izquierdo, Angeles & Lafuente, Juan Angel, 2004. "International transmission of stock exchange volatility: Empirical evidence from the Asian crisis," Global Finance Journal, Elsevier, vol. 15(2), pages 125-137, August.
    3. Kleimeier, Stefanie & Sander, Harald, 2000. "Regionalisation versus globalisation in European financial market integration: Evidence from co-integration analyses," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1005-1043, June.
    4. Steven K. Buigut & Neven T. Valev, 2006. "Eastern and Southern Africa Monetary Integration: A Structural Vector Autoregression Analysis," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 586-603, November.
    5. John H. Makin & Dennis E. Logue & Carl H. Stem, 1976. "Eurocurrencies and the International Monetary System," Books, American Enterprise Institute, number 52119, September.
    6. Meshach Jesse Aziakpono, 2008. "Financial And Monetary Autonomy And Interdependence Between South Africa And The Other Sacu Countries," South African Journal of Economics, Economic Society of South Africa, vol. 76(2), pages 189-211, June.
    7. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-836, July.
    8. Perignon, Christophe & Smith, Daniel R. & Villa, Christophe, 2007. "Why common factors in international bond returns are not so common," Journal of International Money and Finance, Elsevier, vol. 26(2), pages 284-304, March.
    9. Andrew K. Rose, 2001. "Currency unions and trade: the effect is large," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 16(33), pages 449-461.
    10. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    11. Baele, Lieven & Ferrando, Annalisa & Hördahl, Peter & Krylova, Elizaveta & Monnet, Cyril, 2004. "Measuring financial integration in the euro area," Occasional Paper Series 14, European Central Bank.
    12. Sander, Harald & Kleimeier, Stefanie, 2004. "Convergence in euro-zone retail banking? What interest rate pass-through tells us about monetary policy transmission, competition and integration," Journal of International Money and Finance, Elsevier, vol. 23(3), pages 461-492, April.
    13. Richard N. Cooper, 1971. "Towards an International Capital Market?," International Economic Association Series, in: Charles P. Kindleberger & Andrew Shonfield (ed.), North American and Western European Economic Policies, chapter 9, pages 192-208, Palgrave Macmillan.
    14. Bettina Becker & Stephen G. Hall, 2009. "A new look at economic convergence in Europe: a common factor approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 85-97.
    15. Ms. Iyabo Masha & Mr. Leighton S Harris & Mr. Jian-Ye Wang & Ms. Kazuko Shirono, 2007. "The Common Monetary Area in Southern Africa: Shocks, Adjustment, and Policy Challenges," IMF Working Papers 2007/158, International Monetary Fund.
    16. Jannie Rossouw, 2006. "An Analysis Of Macro‐Economic Convergence In Sadc1," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 382-390, September.
    17. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 325-348, August.
    18. Harald Sander & Stefanie Kleimeier, 2006. "Interest Rate Pass‐Through In The Common Monetary Area Of The Sacu Countries," South African Journal of Economics, Economic Society of South Africa, vol. 74(2), pages 215-229, June.
    19. Li, Baibing & Martin, Elaine B. & Morris, A. Julian, 2002. "On principal component analysis in L1," Computational Statistics & Data Analysis, Elsevier, vol. 40(3), pages 471-474, September.
    20. Banerjee, Anindya & Lumsdaine, Robin L & Stock, James H, 1992. "Recursive and Sequential Tests of the Unit-Root and Trend-Break Hypotheses: Theory and International Evidence," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 271-287, July.
    21. Lieven Baele & Annalisa Ferrando & Peter Hördahl & Elizaveta Krylova & Cyril Monnet, 2004. "Measuring financial integration in the euro area," Occasional Paper Series 14, European Central Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tinashe H. D. Kambadza & Zivanemoyo Chinzara, 2012. "Returns Correlation Structure and Volatility Spillovers Among the Major African Stock Markets," Working Papers 305, Economic Research Southern Africa.
    2. Henry Penikas, 2023. "Smoothing the Key Rate Pass-Through: What to Keep in Mind When Interpreting Econometric Estimates," Russian Journal of Money and Finance, Bank of Russia, vol. 82(3), pages 3-34, September.
    3. Motelle, Sephooko & Biekpe, Nicholas, 2015. "Financial integration and stability in the Southern African development community," Journal of Economics and Business, Elsevier, vol. 79(C), pages 100-117.
    4. Heckelman, Jac C. & Young, Andrew, 2018. "How Global is Globalization?," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(3), August.
    5. Ovidiu Stoica & Otilia-Roxana Oprea & Ionel Bostan & Carmen Sandu Toderașcu & Cristina Mihaela Lazăr, 2020. "European Banking Integration and Sustainable Economic Growth," Sustainability, MDPI, vol. 12(3), pages 1-19, February.
    6. Zerihun, Mulatu F. & Breitenbach, Marthinus C., 2016. "Nonlinear approaches in testing PPP: Evidence from Southern African development community," Economic Modelling, Elsevier, vol. 56(C), pages 162-167.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. van Hoesel, C.P.M., 2004. "Optimization in telecommunication networks," Research Memorandum 045, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. Marotta, Giuseppe, 2009. "Structural breaks in the lending interest rate pass-through and the euro," Economic Modelling, Elsevier, vol. 26(1), pages 191-205, January.
    3. Sander, Harald & Kleimeier, Stefanie, 2006. "Convergence of interest rate pass-through in a wider euro zone?," Economic Systems, Elsevier, vol. 30(4), pages 405-423, December.
    4. Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
    5. Belke, Ansgar & Beckmann, Joscha & Verheyen, Florian, 2013. "Interest rate pass-through in the EMU – New evidence from nonlinear cointegration techniques for fully harmonized data," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 1-24.
    6. Giuseppe Marotta, 2008. "Lending interest rate pass-through in the euro area. A data-driven tale," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 08101, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    7. Matthew Oladapo Gidigbi & Benedict Akanegbu, 2017. "Does Financial Integration Exist in ECOWAS?," Journal of Social and Development Sciences, AMH International, vol. 8(2), pages 14-27.
    8. Gianluca Di Lorenzo & Giuseppe Marotta, 2005. "A less effective monetary transmission in the wake of EMU? Evidence from lending rates pass-through," Heterogeneity and monetary policy 0503, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
    9. Peleg, Bezalel & Peters, Hans, 2009. "Nash consistent representation of effectivity functions through lottery models," Games and Economic Behavior, Elsevier, vol. 65(2), pages 503-515, March.
    10. Andries, Natalia & Billon, Steve, 2016. "Retail bank interest rate pass-through in the euro area: An empirical survey," Economic Systems, Elsevier, vol. 40(1), pages 170-194.
    11. Giuseppe Marotta, 2008. "Lending interest rate pass-through in the euro area. A data-driven tale," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0012, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    12. Gianluca Di Lorenzo & Giuseppe Marotta, 2006. "Multiple breaks in lending rate pass-through A cross country study for the euro area," Heterogeneity and monetary policy 0602, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
    13. Jakob de Haan & Tigran Poghosyan & Jakob de Haan, 2007. "Interest Rate Linkages in EMU Countries: A Rolling Threshold Vector Error-Correction Approach," CESifo Working Paper Series 2060, CESifo.
    14. Kleimeier, Stefanie & Sander, Harald, 2022. "Twenty years with the Euro: Eurozone banking market integration revisited," Economic Modelling, Elsevier, vol. 114(C).
    15. Giuseppe Marotta, 2006. "Structural breaks in the interest rate pass-through and the euro. A cross-country study in the euro area and the UK," Heterogeneity and monetary policy 0612, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
    16. Carmen López Andión & José Manuel Maside Sanfiz & Ma Celia López Penabad, 2010. "Co-Integration between Mortgage Markets in the Monetary Union: 1995–2008," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 60(1), pages 40-57, February.
    17. Ingrid Groessl & Artur Tarassow, 2015. "A Microfounded Model of Money Demand Under Uncertainty, and some Empirical Evidence," Macroeconomics and Finance Series 201504, University of Hamburg, Department of Socioeconomics, revised Jan 2018.
    18. Hens, Thorsten & Jean-Jacques Herings, P. & Predtetchinskii, Arkadi, 2006. "Limits to arbitrage when market participation is restricted," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 556-564, August.
    19. Pierre Perron & Gabriel Rodríguez, "undated". "Residuals-based Tests for Cointegration with GLS Detrended Data," Boston University - Department of Economics - Working Papers Series wp2015-017, Boston University - Department of Economics, revised 19 Oct 2015.
    20. Mr. Ananthakrishnan Prasad & Mr. Raphael A Espinoza, 2012. "Monetary Policy Transmission in the GCC Countries," IMF Working Papers 2012/132, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:44:y:2012:i:29:p:3857-3876. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.