Bank lending rates and spreads in EMDEs: Evolution, drivers, and policies
Banks dominate credit intermediation and savings mobilization in most emerging markets and developing economies (EMDEs). As bank lending interest rates and the lending-deposit interest spreads capture the efficiency with which banks allocate society’s savings to its most productive uses, high lending rates and spreads pose a challenge for policy makers in EMDEs: they can affect monetary policy transmission, hinder private investment and job creation, inhibit financial development and inclusion, and ultimately compromise financial stability.