RDP 9206: Loan Rate Stickiness: Theory and Evidence Appendix 1: Data
June 1992
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INTEREST RATES
(A) Personal lending rates
Personal lending rates were obtained from two sources. The first source is from the OECD Financial Statistics, (Part 1, Section 2: Domestic Markets – Interest Rates). The rate shown is the predominant rate charged by major banks, as at the end of the month. It is an effective or reducing rate, not a flat rate. The second source is the maximum and minimum variable personal loan rates, secured and unsecured, obtained from a major Australian bank.
(B) Overdraft Rates
(i) Standard Rate
This rate, obtained from internal RBA sources, is reported by one of the major Australian banks. It is the most commonly charged rate to borrowers for overdrafts of less than $100,000, typically small business borrowers. In May 1990, a retail index rate was introduced. Loans to small businesses are expressed as the retail index rate plus a margin.
(ii) The Rate on Overdrafts of $100,000 and Over
The minimum of a range of indicator rates reported by major banks. This rate is used for the pre-deregulation period. RBA Bulletin, Table F.3.
(iii) Reference Rate for Large Borrowers
The National Australia Bank Benchmark Rate applies to the Corporate Clients accounts. End month or near end-month figures obtained from the Monday edition of the Australian Financial Review.
(iv) Reference Rate for Small Borrowers
The National Australia Base Rate applies to the retail and commercial accounts. End month or near end month figures are obtained from the Monday edition of the Australian Financial Review.
(C) Credit Card Lending Rates
This rate is from internal RBA sources, and is an average of rates reported by the major banks on a bankcard with 55 day free credit facility.
(D) Housing Loan Rate
The housing loan rate to individuals for owner occupation is from the RBA Bulletin, Table F.3. This is a predominant rate on variable interest rate loans.
BANKS' COST OF FUNDS
We have constructed three different measures of costs of funds; retail, wholesale and total. The “retail rate” is a weighted average interest rate of current deposits, fixed deposits less than $50,000, passbook, statement and investment accounts and “Other” (Cash management accounts). The “wholesale rate” is a weighted average interest rate of fixed deposits greater than $50,000, certificates of deposits and foreign currency deposits. The broadest measure is the total weighted average deposit rate. This rate takes into account all the major deposit sources available to a bank.
The deposit categories and corresponding interest rates, along with their source are listed below.
| LIABILITY | COMMENTS | INTEREST RATE | COMMENTS |
|---|---|---|---|
| Current: Not bearing interest |
Table D.1 plus gov't deposits, Table B.2. Prior Jan. 1989, gov't from TB liab. Table C.1 |
0 rate applied | |
| Current: bearing interest |
As above | Current account rate |
Supplied by a major Australian bank |
| Trading Bank Fixed: less than $50,000 |
The breakdown of trading bank fixed deposits, including government, into large and small are available from internal RBA sources, prior to January 1989. From this date, All bank fixed divided using last available proportions |
3 month to maturity rate, Table F.3 |
This is the most common maturity period. Data is unavailable for further breakdown |
| Trading Bank Fixed: over $50,000 |
As above | Fixed deposit, weighted avg. Table J.3 (discontinued Dec 88), and Table F.3 |
Weighted average rate available to Dec. 1988. From this date, the 3 month to maturity is most common |
| Savings Bank Fixed |
Prior to January 1989, from Table E.1 (Discontinued). Includes gov't deposits. Now in All Bank Liab. Table B.2 |
3 month to Maturity, less than $50,000, Table F.3 |
Assumes all S.B. fixed deposits are less than $50,000 |
| Investment | As above, Table B.2 | Investment accounts, Table F.3 |
Average of min and max rates |
| Statement | As above, Table B.2 | Statement accounts, Table F.3 |
Predominant rate |
| Passbook | As above, Table B.2 | Passbook accounts, Table F.3 |
Average of min and max rates |
| “Other” | Internal RBA sources indicate these deposits are Cash Management Accounts. Table B.2 |
CMA rate | Internal RBA sources |
| Certificates of Deposits |
Table B.2. Prior Jan. 1989, from Table C. 1 |
CD rate Table F.3 |
Weighted average issue yield |
| Foreign Currency |
Foreign currency liabilities, Table B.1 |
90 day bank bill rate |
No rate is available. Assume earn market rates |
INTEREST RATES: OTHER COUNTRIES
UNITED STATES
Prime Rate
The prime rate is from the Federal Reserve Bulletin, Table 1.33, “Prime rate charged by banks on short-term business loans”. The interest rates are recorded on the date when they change, allowing an end-month series to be constructed.
Credit Card Rate
The credit card rate is from the Federal Reserve Bulletin, Table 1.56, “Terms of Consumer Installment Credit”, item 4, Credit card. The series is available on a quarterly basis only.
Certificate of Deposit
The cost of funds measure is from the Federal Reserve Bulletin, Table 1.35, “Interest Rates Money Market and Capital Markets”, item 12, Certificates of Deposits, secondary market, 3-month.
UNITED KINGDOM
Prime Rate
The prime or base rate is from Central Statistical Office, Finance Statistics, published by the Government Statistical Service, England, Table 13.10 “Selected Retail Banks: Base Rates”. The prime rate is recorded on the date when they are changed, allowing an end-month series to be constructed.
Housing Lending
The variable mortgage rate on housing lending is from the OECD Financial Statistics, Monthly, Part 1 Section 2. Table R.2/17. “Lending and Borrowing Rates”. Item III 1(c) Building society mortgage loans, nominal rate.
Certificates of Deposit
The cost of funds measure is the Sterling certificates of deposits 3 months, from Central Statistical Office, Finance Statistics, published by the Government Statistical Service, England, Table 13.8 “Short Term Money Rates: Last Friday of the Period”. The minimum of the range of rates is used.
CANADA
Prime Rate
The prime rate is from the Bank of Canada Review, Table F1 “Financial Market Statistics”, Chartered Banks Administered Interest Rates – Prime Business. Figures are the last Wednesday of the month.
Banker's Acceptances
The measure of the cost of funds is from the Bank of Canada Review, Table F.1 “Financial Market Statistics”. As no Certificate of Deposit rate is available, we use the Banker's Acceptances rate, 1 month. Figures are the last Wednesday of the month.