Testing the law of one price in retail banking : an analysis for Colombia using a pair-wise approach

Borradores de Economia
Number: 
733
Published: 
Classification JEL: 
G21
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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We apply a pair-wise approach to test the law of one price for deposit (lending) rates in Colombia. We find that when banks are of different size deposit rates adjust quickly, suggesting a competitive environment. By contrast, lending rates adjust rapidly