Productivity gains in the banking industry affect interest rates, study finds

Paper analyses Spanish banks between 1993 and 2007

bank-spain
Bank of Spain

Productivity gains in Spain's banking industry translate into changes in the interest rates of loans and deposits, according to a working paper published by the Bank of Spain.

In Productivity and welfare: an application to the Spanish banking industry, Alfredo Martín Oliver, Sonia Ruano Pardo and Vicente Salas Fumás explore a model that predicts "more productive banks set lower (higher) interest rates on loans (deposits) and increase their market share", doing this through "higher demand per

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