Costs to bank funding not fully passed on to markets: Norges Bank paper

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A Norges Bank paper published on Wednesday shows that the effects of changes in banks' funding costs is not fully passed on to Norwegian borrowers.

The paper's authors, Arvid Raknerud, Bjørn Helge Vatne and Ketil Rakkestad, use data on three-month Norwegian Inter Bank Offered Rate (Nibor) to study the effects of banks' funding costs on their retail rates.

The authors find clear evidence of incomplete pass-through from the market rate to retail rates, with a unit increase in Nibor leading to an

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