Determinants of the interbank lending rate in Argentina

Working papers | 2009 | N 41

Abstract

This work analyzes the determinants of the interest rate of the interbank market for short-term unsecured loans (call) in Argentina. The results indicate that the heterogeneity of the entities, both in size and origin of capital, influences the interest rate agreed upon in the operation. Additional aspects such as the link between entities, the degree of concentration in supply or demand, also affect the cost of resources. The market structure is relevant, as is the active repo rate set by the BCRA. Finally, the rate reacts positively when banks have a greater demand for liquidity, both due to seasonal issues and episodes of deposit reduction.