Template-type: ReDIF-Paper 1.0

Author-Name: Emina Milišić
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Author-Workplace-Name: Central Bank of Bosnia and Herzegovina
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Author-Name: Emina Žunić Dželihodžić
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Author-Workplace-Name: Central Bank of Bosnia and Herzegovina
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Title: Interest Rate Pass-through under a Currency Board Regime: Evidence from Bosnia & Herzegovina
Abstract: This paper examines the pass-through of European Central Bank (ECB) monetary policy to deposit rates in Bosnia and Herzegovina (B&H). We use aggregate and bank-level data to study interest rate pass-through by bank size and ownership for the period 2012-2023. In extensions, we also study pass-through by counterparty and maturity of deposit contracts. Our results suggest that average pass-through is slow and incomplete. We document that pass-through is faster and more complete for banks which are small and foreign-owned, as compared to banks which are large (and foreign-owned), or banks which are small and domestic. This finding suggests that pass-through depends both on domestic market power of banks as well as their access to foreign money markets.
Keywords: monetary policy; transmission mechanism; deposit rates; currency board
Classification-JEL: E42, E52, E58, E60

Length: 35 pages
Creation-Date:  2024-07-04
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Number: 10-2024
File-URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP10-2024.pdf
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Handle: RePEc:gii:giihei:HEIDWP10-2024