ECB Monetary Policy Passthrough to Bank Interest Rates During Tightening: Republic of Kosovo

This paper analyzes the transmission of ECB policy rate changes to bank interest rates in Kosovo during the 2022-23 tightening cycle. While both lending and deposit rates increased, the passthrough was more limited compared to the euro area and regional peers.
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Volume/Issue: Volume 2025 Issue 004
Publication date: January 2025
ISBN: 9798400299162
$15.00
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Exports and Imports , Finance , Inflation , Credit , Monetary tightening , Loans , Monetary unions , Bank soundness , Inflation , Deposit rates , Currency boards , Financial inclusion , Central bank policy rate , Financial sector development , Commercial banks , Monetary policy transmission , interest rates , banking sector , euroization , financial development , Kosovo

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Summary

This paper analyzes the transmission of ECB policy rate changes to bank interest rates in Kosovo during the 2022-23 tightening cycle. While both lending and deposit rates increased, the passthrough was more limited compared to the euro area and regional peers. Three key factors explain this limited transmission: Kosovo's stage of financial development, high banking sector liquidity, and significant bank concentration.

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