Browsing by Author "Mora-Guerrero, David Ricardo"
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- El efecto traspaso de la tasa de interés de los instrumentos del Banco Central en Costa Rica hacia las tasas de interés del sistema financieroAs part of the preparation and transition process to an inflation target regime in the year 2011 the Central Bank of Costa Rica (BCCR) established the Monetary Policy Interest Rate as its main monetary policy instrument, since then it has become of institutional interest to assess the effectiveness of this instrument to influence the remaining interest rates in the financial system. This is why this paper studies the Central Bank of Costa Rica monetary policy interest rate pass through to the interest rates of the financial system from January 2000 until July 2013. The paper has two parts, the first part tests from the Engle and Granger (1987) point of view the following hypothesis: i) the pass through is equal to one, ii) the pass through changed after the adoption of a new exchange rate regime, iii) the pass through speed changed along with the change in the exchange rate regime (non-linearity), iv) the banks in the financial system do not adjust symmetrically their interest rates (in order to increase their profit margin). In the second part the paper analyses the main factors that affect the effectiveness of the pass through mechanism, financial dollarization, banking industry concentration, the level of government debt and the Central Bank deficit. The paper concludes that: i) the pass through id equal to one only after the adoption of the new exchange rate regime, ii) the pass through coefficient suffered a positive change after the implementation of the new exchange rate regime, iii) the pass through speed increased after the exchange rate regime change, iv) there is asymmetry in the pass through, lastly, v) the effectiveness of the monetary policy can be affected negatively by the factors mentioned above.