ASYMMETRIC ADJUSTMENT OF COMMERCIAL BANK INTEREST-RATES - EVIDENCE FROM MALAYSIA AND SINGAPORE

This paper examines the rigidity of commercial bank interest rates, us ing evidence from Singapore and Malaysia. An asymmetric error correcti on technique is used to test whether mean adjustment lags are differen t when retail rates are above or below their equilibrium levels. It is concluded, in both countries, that the mean adjustment lag is shorter when the deposit rate is above its equilibrium than when it is below its equilibrium. Using the framework of Hannan and Berger (1991), this finding implies that the hypothesis of collusion cannot be rejected. (JEL G21). Copyright (C) 1996 Elsevier Science Ltd