Zaragoza, España
Banking has driven the development of the world for centuries. An interesting issue to analyze is the optimal spread on financial products reflecting the value added that does not generate economic distortions for consumers in intertemporal decisions. Based on a gravity equation for these services, this paper examines the optimality of a modified Quoted Spread, the recently-proposed mobile-ratio, by assessing whether the pure interest expressed as a gravity equation between interests does not change after applying this spread. Results show that the mobile-ratio is the specification of the spread with no distortions on investment decisions, where a Granger test to a panel of countries confirms that predictability between both variables cannot be accepted. The proposal can be useful for policy-makers, regarding fiscal and monetary policy. First, because this ratio plays a key role for the VAT on financial services, and second, because this can be a task for improving current banking regulations and guidelines, reducing uncertainty and smoothing the business cycle.
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