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Testing the Law of One Price in Retail Banking: An Analysis for Colombia Using a Pair Wise Approach

Serie

  • Borradores de economía

Resumen

  • We apply a pair-wise approach to test the law of one price for deposit (lending) rates in Colombia. We find that when banks are of different size deposit rates adjust quickly, suggesting a competitive environment. By contrast, lending rates adjust rapidly when banks are of similar size, supporting market segmentation.

fecha de publicación

  • 2012-09

Líneas de investigación

  • Colombia
  • Law of One Price
  • Retail Interest Rates

Issue

  • 9981