摘要：This paper analyses the impact of loan market competition on the interest rates applied by euro areabanks to loans and deposits during the 1994-2004 period, using a novel measure of competition calledthe Boone indicator. We find evidence that stronger competition implies significantly lower spreadsbetween bank and market interest rates for most loan market products, in line with expectations. Usingan error correction model (ECM) approach to measure the effect of competition on the pass-through of market rates to bank interest rates, we likewise find that banks tend to price their loans more inaccordance with the market in countries where competitive pressures are stronger. Further, where loanmarket competition is stronger, we observelarger bank spreads (implying lower bank interest rates) oncurrent account andtime deposits. This would suggest that the competitive pressure is heavier in the loan market than in the deposit markets, so that banks under competition compensate for theirreduction in loan market income by lowering their deposit rates. We observe also that bank interestrates in more competitive markets respond more strongly to changes in market interest rates. Thesefindings have important monetary policy implications, as they suggest that measures to enhancecompetition in the European banking sector will tend to render the monetary policy transmissionmechanism more effective.
