The Behaviors of Lending, Deposit Rates and Intermediation Premium of Pakistani Banks with Different Types of Ownership Structures

Authors

  • Chu V. Nguyen University of Houston-Downtown
  • Muhammad Mahboob Ali Daffodil International University, Dhaka,
  • Alexandru Mircea Nedelea Stefan cel Mare University of Suceava

Keywords:

Asymmetry, co-integration, lending rate, deposit rate, intermediation premium, TAR Model, Pakistan

Abstract

This study applies Enders and Siklos’ (2001) procedure to test for the long-run asymmetric co-integrating relationship and short-run dynamic Granger causality between Pakistani lending and deposit rates set by public, private, foreign, specialized, and all banks combined over the period January 2004 to December 2013. Terrorist activities on the money market plays negative role. The empirical results suggest a long-run asymmetric co-integration relationship between the rates. The Granger causality tests suggest bidirectional and asymmetric causality between lending and deposit rates set by Pakistani public and private banks, while the lending rates set by the country’s foreign, specialized and all banks combined are exogenous from their deposit rates.  The unusually fast and overshot adjustments of the lending rates in response to increases in the intermediation premium of public banks are interpreted as graft maximization.  The asymmetric and different nature of the Granger causalities exhibited by banks with different ownership structures should be of special interest for the Central Bank in formulating and implementing its countercyclical monetary policy and for corporations in determining their capital structures.

Author Biography

Alexandru Mircea Nedelea, Stefan cel Mare University of Suceava

Alexandru NEDELEA, Ph.D., is an Associate Professor of Marketing at the University Stefan cel Mare of Suceava, Romania. He has written extensively for a wide range of academic and professional audience: Small and Medium Enterprises in Contemporary Society (KMV, Germany), International Tourism: World Geography and Developmental Perspectives (Abhijeet Publications, New Delhi, India), Tourism Marketing (Derc Publishing House, Tewksbury, USA), Knowledge Management Practices, Comparative Tourism Marketing Case Studies (Abhijeet Publications, New Delhi, India). He is editor-in-chief of the journals Ecoforum and Revista de turism 9Journal of Tourism: Studies and Research in Tourism) and member of the editorial board of the journals Amfiteatru Economic (indexed in Thomson Reuters - ISI Web of Knowledge), International Journal of Leisure and Tourism Marketing, Journal of Tourism: An International Research Journal, Tourism Today, World Journal of Ecotourism, Tourism Issues, European Journal of Tourism Research, Environmental Economics. He has been accorded membership in scientific associations like International Association of Scientific Experts in Tourism, International Association on Public and Non Profit Marketing, Romanian Marketing Association, International Network for Research in Consumer Behaviour Studies, Regional Science Association International, World Research Club (WRC), American Society for Public Administration, European Association of Research on Services (RESER), Marketing and Tourism Research Interest Committees - EuroMed Research Business Institute (EMRBI), Centre International de Recherche et d`Etudes Touristiques (CIRET). He is coordinator of Asian Studies Club Romania-China (www.romania-china.ro), Voyage Club (www.clubvoiaj.ro), Bucovina Tourism Marketing Center (www.tourisminbucovina.ro), Volunteer Order (www.ordinulvoluntarilor.ro) and Marketing Club (www.marketingclub.ro)Contact:E-mail: alnedelea(at)yahoo.com Stefan cel Mare University of Suceava, Romania Faculty of Economic Sciences and Public Administration Economy, Business Administration and Tourism Department 720229, Suceava, 13, Universitatii Street Phone: + 40 230 522978 int.297

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Published

27.01.2017

Issue

Vol. 6 No. 1 (2017)

Section

Accounting, Finance, Statistics and Economic informatics

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