Open AccessThe key role of quoted spreads in financial services and transactions
Author(s) -
Guillermo Peña
Publication year - 2021
Publication title -
economics and business letters
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.197
H-Index - 4
ISSN - 2254-4380
DOI - 10.17811/ebl.10.3.2021.208-216
Subject(s) - database transaction , key (lock) , economics , transaction cost , value (mathematics) , financial transaction , investment (military) , monetary economics , financial services , business , microeconomics , finance , computer science , computer security , machine learning , politics , political science , law , programming language
Banking has driven the development of the world for centuries. An interesting issue to analyze is the optimal spread on financial products reflecting the value added that does not generate economic distortions for consumers in intertemporal decisions. Based on a gravity equation for these services, this paper examines the optimality of a modified Quoted Spread, the recently-proposed mobile-ratio, by assessing whether the pure interest expressed as a gravity equation between interests does not change after applying this spread. Results show that the mobile-ratio is the specification of the spread with no distortions on investment decisions. Regarding fiscal policy, this ratio plays a key role for both the Financial Transaction Tax and the VAT on financial services.