Banking Market Integration in the SADC Countries: Evidence from Interest Rate Analyses

M. Aziakpono, S. Kleimeier, H. Sander

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This study investigates the state, development and drivers of banking market integration in the member countries of the Southern African Development Community (SADC). A Principal Component Analysis (PCA) of national retail interest rates indicates increasing integration in loan and deposit markets. These integration processes are not developing uniformly and we can identify a convergence club. When investigating the interest rate pass-through from central bank onto retail rates for this convergence club, we find both, genuine and monetary-integration driven processes though the latter dominate. We thus conclude that a selective expansion of the Common Monetary Area (CMA) is possible.

Original languageEnglish
Pages (from-to)3857-3876
Number of pages20
JournalApplied Economics
Volume44
Issue number29
DOIs
Publication statusPublished - 1 Jan 2012

Keywords

  • banking market integration
  • monetary integration
  • Southern African Development Community
  • interest rate pass-through
  • principle components
  • AFRICAN DEVELOPMENT COMMUNITY
  • COMMON MONETARY AREA
  • RATE PASS-THROUGH
  • FINANCIAL INTEGRATION
  • CURRENCY UNIONS
  • SACU COUNTRIES
  • SOUTH-AFRICA
  • UNIT-ROOT
  • CONVERGENCE
  • COINTEGRATION

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