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Market Concentration and Market Power of the Swedish Mortgage Sector: a Wavelet Panel Efficiency Analysis
Jönköping University, Jönköping International Business School, JIBS, Statistics. (Statistics)ORCID iD: 0000-0002-4535-3630
Jönköping University, Jönköping International Business School, JIBS, Statistics. (Economics and Statistics)ORCID iD: 0000-0003-3144-2218
Jönköping University, Jönköping International Business School, JIBS, Statistics. Linnaeus University, Växjö, Sweden. (Economics and Statistics)ORCID iD: 0000-0002-3416-5896
2018 (English)In: Studies in Nonlinear Dynamics and Econometrics, ISSN 1081-1826, E-ISSN 1558-3708, Vol. 22, no 4Article in journal (Refereed) Published
Abstract [en]

Based on a panel wavelet efficiency analysis, we conclude that there is a systematic pattern of positive asymmetric price transmission inefficiencies in the interest rates of the largest Swedish mortgage lenders. Thus, there seems to be a higher propensity for mortgage lenders to swiftly increase their customers’ mortgage interest rates subsequent to an increase in its borrowing costs, than to decrease their customers’ mortgage rates subsequent to a corresponding decrease in the cost of borrowing. A unique contribution is our proposed wavelet method which enables a robust detection of positive asymmetric price transmission effects at various time-frequency scales, while simultaneously controlling for non-stationary trends, autocorrelation, and structural breaks. Since traditional time-series analysis methods essentially implies that several wavelet time scales are aggregated into one single time series, the blunt traditional error correction analysis totally failed to discover APT effects for this data set. In summary, using the wavelet method we show that even though the customers in the end finally will benefit from decreases in the mortgage lenders’ financing costs, the lenders wait disproportionally long before the customers’ mortgage rates are decreased.

Place, publisher, year, edition, pages
Walter de Gruyter, 2018. Vol. 22, no 4
Keywords [en]
APT; banking sector; interest rate; wavelet
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-37274DOI: 10.1515/snde-2016-0021ISI: 000444539100005Scopus ID: 2-s2.0-85045845294OAI: oai:DiVA.org:hj-37274DiVA, id: diva2:1140707
Available from: 2017-09-13 Created: 2017-09-13 Last updated: 2018-10-02Bibliographically approved

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Månsson, KristoferSjölander, PärShukur, Ghazi

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