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Synchronisation and staggering of interest rate change by UK financial services firms

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  • John Ashton

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 seen 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.

Suggested Citation

  • John Ashton, 2009. "Synchronisation and staggering of interest rate change by UK financial services firms," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 55-69.
    • Handle: RePEc:taf:irapec:v:23:y:2009:i:1:p:55-69
    DOI: 10.1080/02692170802496695
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    References listed on IDEAS

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    Cited by:

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    2. John K. Ashton, 2012. "Do Depositors Benefit from Bank Mergers? An Examination of the UK Deposit Market," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 19(1), pages 1-23, February.

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