05-09-2007, 07:37 PM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by CBPian</i>
<br />You are correct .. we have negative real interest rates for many years which is one of the problems our saving rates are so low.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
What do you mean by saving rates here? Is it the proportion of income that people save or the interest rate that they can get on the saving account?
If you meant the former than your statement is ambigious. The possible reasons for larger spreads are
a. lack of comptition amongst banks operating in the market,
b. different credit profiles (how risky are is the counterparty) of custumers. e.g. bank's borrowing rates are lower because they are seen less risky than individuals, especially, in the ecoomy where we have seen many examples of loan defaults.
DT
<br />You are correct .. we have negative real interest rates for many years which is one of the problems our saving rates are so low.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
What do you mean by saving rates here? Is it the proportion of income that people save or the interest rate that they can get on the saving account?
If you meant the former than your statement is ambigious. The possible reasons for larger spreads are
a. lack of comptition amongst banks operating in the market,
b. different credit profiles (how risky are is the counterparty) of custumers. e.g. bank's borrowing rates are lower because they are seen less risky than individuals, especially, in the ecoomy where we have seen many examples of loan defaults.
DT
