Abstract
Abstract This study aims to examine the determinants of the MIR interest rate in the Euro area for the period 2003Q1-2015Q3. By employing Fixed and Random Effects as econometric methodologies, I examine whether the MIR rate is affected by the following macroeconomic factors: unemployment rate, inflation rate, GDP growth, political stability index, and wages as percentage of GDP. All these factors have been found to be significant drivers of the MIR rate and thus, they have to be taken into consideration when designing macro-prudential policies. The findings in this paper provide alternative explanations for the empirical evidence concerning interest rate spreads behaviour.
Highlights
The theme of the MIR rate is relatively new in the literature of interest rates determinants despite the fact that it exists since 2003
The aim of this paper is to investigate the relationship between European MIR interest rate margin and the general macroeconomic environment, proxied by country-level determinants
The objective of this study is to examine the main drivers of MIR rate in the euro area for the period 2003Q1-2015Q3
Summary
This study aims to examine the determinants of the MIR interest rate in the Euro area for the period 2003Q1-2015Q3. The aim of this paper is to investigate the relationship between European MIR interest rate margin and the general macroeconomic environment, proxied by country-level determinants. The objective of this study is to examine the main drivers of MIR rate in the euro area for the period 2003Q1-2015Q3
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