Banking Sector Reform and Interest Rates in Transition Economies: Bank-Level Evidence from Kyrgyzstan | Zendy

Martin Brown | Zendy; Maria Clara Rueda Maurer | Zendy; Tamara Pak | Zendy; Nurlanbek Tynaev | Zendy

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Banking Sector Reform and Interest Rates in Transition Economies: Bank-Level Evidence from Kyrgyzstan

Author(s) -

Martin Brown,

Maria Clara Rueda Maurer,

Tamara Pak,

Nurlanbek Tynaev

Publication year - 2008

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.968390

Subject(s) - interest rate , economics , financial system , transition (genetics) , economic reform , monetary economics , business , international economics , china , political science , biochemistry , chemistry , law , gene

We examine the impact of banking sector reforms on interest rates using bank-level data from Kyrgyzstan for 1998-2005. We find ,that increased confidence ,in the ,banking ,sector has contributed significantly to lowering interest rate levels, while the impact of lower intermediation costs, credit risk, and capital costs are negligible. Our results further suggest that the liberalization of the ,Kyrgyz financial sector has reduced both deposit and lending rates. Finally, we find that despite considerable restructuring, the Kyrgyz banking sector has not become more competitive. As a consequence, banks’ interest rates have not fully responded to lower market rates following macroeconomic,stabilization. Keywords:Transition, Financial Sector Development, Interest Rates JEL: G21, 016, P34 Corresponding ,author: martin.brown@snb.ch. * Swiss National Bank ** National Bank of the

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