Determinants of Interest Rates in Bangladesh
Table of Contents
Executive Summary……………………………………………………………….2
Introduction………………………………………………………………………..2
Origin of the report………………………………………………………………...2
Objective of the report……………………………………………………………..2
Scopes and Limitations…………………………………………………………….3
Methodologies……………………………………………………………………...3
Interest rate and its determinants…………………………………………………3-5
Analysis of regression equation………………………………………………….6-7
Analysis of correlation matrix……………………………………………………7-8
Conclusion…………………………………………………………........................8
Bibliography……………………………………………………………………….8
Determinants of Interest Rates in Bangladesh
Executive Summary:
Interest rate is applicable on all type of lending allover the world. Lending can be of different types, but in this report we will be concerning about the determinants of interest rate on commercial lending in Bangladesh. Interest rates can be determined by many factors but here we will consider six factors as the determinants of interest rate. These six factors are Gross Domestic Product (GDP), Consumer Price Index (CPI), Budget Deficit, Money Supply, Remittance and Foreign Direct Investment (FDI). In this report we will try to find out how these factors affect the weighted average rate of interest on commercial lending and the relationships between each of the factors and the interest rate. To find the effect of the factors on interest rate we will analyze the regression equation and to find the relationship we will analyze the correlation matrix. We will use statistical software which is called SPSS to produce the regression equation and correlation matrix. To make a proper report we need a large pool of data and we decided to collect data from 1981-1982 to 2007-2008. We collected data from Economic Trends published by Bangladesh Bank, Economic Review published by Finance Ministry of Bangladesh Government, website of Bangladesh Bank and website of ministry of finance. But we were unable to find all the necessary data from
Executive Summary……………………………………………………………….2
Introduction………………………………………………………………………..2
Origin of the report………………………………………………………………...2
Objective of the report……………………………………………………………..2
Scopes and Limitations…………………………………………………………….3
Methodologies……………………………………………………………………...3
Interest rate and its determinants…………………………………………………3-5
Analysis of regression equation………………………………………………….6-7
Analysis of correlation matrix……………………………………………………7-8
Conclusion…………………………………………………………........................8
Bibliography……………………………………………………………………….8
Determinants of Interest Rates in Bangladesh
Executive Summary:
Interest rate is applicable on all type of lending allover the world. Lending can be of different types, but in this report we will be concerning about the determinants of interest rate on commercial lending in Bangladesh. Interest rates can be determined by many factors but here we will consider six factors as the determinants of interest rate. These six factors are Gross Domestic Product (GDP), Consumer Price Index (CPI), Budget Deficit, Money Supply, Remittance and Foreign Direct Investment (FDI). In this report we will try to find out how these factors affect the weighted average rate of interest on commercial lending and the relationships between each of the factors and the interest rate. To find the effect of the factors on interest rate we will analyze the regression equation and to find the relationship we will analyze the correlation matrix. We will use statistical software which is called SPSS to produce the regression equation and correlation matrix. To make a proper report we need a large pool of data and we decided to collect data from 1981-1982 to 2007-2008. We collected data from Economic Trends published by Bangladesh Bank, Economic Review published by Finance Ministry of Bangladesh Government, website of Bangladesh Bank and website of ministry of finance. But we were unable to find all the necessary data from
Bibliography: 1. Economic Trends, Statistics Department, Bangladesh Bank (August 2009); Page # 13, 38, 45, 46, 75, 79 & 91. 2. Bangladesh Economic Review 2000, Economic Adviser 's Wing, Finance Division, Ministry of Finance; Page # 172, Appendix – 45. 3. Bangladesh Economic Review 2008, Economic Adviser 's Wing, Finance Division, Ministry of Finance; Page # 239, Appendix – 1.1 & Page # 292, Appendix – 55. 4. Bangladesh Bank Website: www.bangladesh-bank. 5. Ministry of Finance Website: www.mof.gov.bd