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

Número: 
733
Publicado: 
Clasificación JEL: 
G21
Palabras clave: 
Law of one price, retail interest rates, Colombia

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Lina Fernanda Torres-Gutierrez, Gonzalo Ossa-Stipcianos, Edwin Mauricio Parra-Rodriguez, Egberto Alexander Riveros, Alvaro José Martinez-Monroy, Julián Andrés Gomez-Duran, Juan Sebastián Rojas-Moreno

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