FACTORS INFLUENCING LENDING RATES OF COMMERCIAL BANKS

Abstract

The purpose of this study is to assess the impact of Inflation (INF), the Business Sentiment Index (BSI) and Bank of Thailand policy rate (MPR) movements, in the lending rates of commercial banks. The data used to complete the analysis was collected monthly from Bank of Thailand over the period of January 2013 to December 2017. A variance of 0.05 was adopted as statistically significant. The study concludes that changes in the both Inflation and Business Sentiment Index will have positive (same direction) change in commercial lending rates, having the effect of reducing the supply of money when rising. Conversely, Bank of Thailand policy rate changes will move commercial rates inversely, and increase the supply of money when rising. Further analysis should be completed with a larger group of variables, over a longer test period.