Selected Issues Papers

ECB Monetary Policy Passthrough to Bank Interest Rates During Tightening: Republic of Kosovo

By Ezgi O. Ozturk

January 17, 2025

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Ezgi O. Ozturk "ECB Monetary Policy Passthrough to Bank Interest Rates During Tightening: Republic of Kosovo", Selected Issues Papers 2025, 004 (2025), accessed January 20, 2025, https://doi.org/10.5089/9798400299162.018

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Summary

This paper analyzes the transmission of ECB policy rate changes to bank interest rates in Kosovo during the 2022-23 tightening cycle. While both lending and deposit rates increased, the passthrough was more limited compared to the euro area and regional peers. Three key factors explain this limited transmission: Kosovo's stage of financial development, high banking sector liquidity, and significant bank concentration.

Subject: Bank soundness, Central bank policy rate, Commercial banks, Currency boards, Deposit rates, Economic integration, Financial inclusion, Financial institutions, Financial markets, Financial sector development, Financial sector policy and analysis, Financial services, Foreign exchange, Inflation, Loans, Monetary unions, Prices

Keywords: Bank soundness, Banking sector, Central bank policy rate, Commercial banks, Credit, Currency boards, Deposit rates, Euroization, Financial development, Financial inclusion, Financial sector development, Inflation, Interest rates, Kosovo, Loans, Monetary policy transmission, Monetary tightening, Monetary unions

Publication Details

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