A COMPARATIVE STUDY OF ALTERNATIVE ECONOMETRIC PACKAGES: AN APPLICATION TO ITALIAN DEPOSIT INTEREST RATES

Table 3

DETERMINANTS OF DEPOSIT INTEREST RATES
PANEL ESTIMATION, 1990-99

Dependent variable: banks’ deposit rate in each province.

Independent variables: Herfindahl index for deposits’ market shares (HER); concentration ratio (R3), i.e.
sum of the first 3 banks’ market shares per province; staff costs per employee (COSPER); costs/total
assets (COSRAT); number of banks per province (NBANKS). Variables refer to end-of-year data, for
the period 1990-99. Regressions include time dummy variables, whose coefficients are not reported. t -
statistics in brackets. * Significant at 1 per cent. ** Significant at 5 per cent. *** Significant at 10 per cent.

	(i) Fixed		(ii) Fixed		(iii) Fixed		(iv) Fixed		(v) Fixed
	effects		effects		effects		effects		effects
HER	-0.22						-0.25
R3	(-0.79)		-0.33	***			(-0.88)		-0.36	**
NBANKS			(-1.92)		0.0028	*	0.0028	*	(-2.05) 0.0029	*
COSPER	-6.48	*	-6.47	*	(3.91) -6.35	*	(3.93) -6.36	*	(3.97) -6.34	*
COSRAT	(-4.50) 4.05	*	(-4.49) 4.06	*	(-4.41) 3.94	**	(-4.41) 3.91	**	(-4.40) 3.92	**
	(2.35)		(2.35)		(2.29)		(2.27)		(2.28)

Number of	10561	10561	10561	10561	10561
observations R²	0.95	0.95	0.95	0.95	0.95
Sum squared residuals	2839.1	2838.22	2834.67	2834.43	2833.38
Hausman test	136.87	139.47	137.86	139.33	143.65

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