Friday, 21 October 2011: 4:15 PM
It is essential for central banks to assess whether or not the pass-through from monetary policy rates to credit and deposit interest rates is complete in order to ensure price stability. If the interest rate pass-through is not complete, the impact of monetary policy actions through other channels of monetary policy will be less effective. This paper analyzes the determinants of interest rate pass-through for emerging market economies. The panel data analysis shows that the pass-through coefficients change over time for emerging market economies. For most countries in the panel this pass-through is found to be faster in recent years. This paper also examines the role of financial market structure on pass-through coefficients. The degree of market concentration and financial soundness indicators are found to be among significant determinants of the pass-through coefficient.