A P P L I E D R E S E A R C H

O N T O P I C :

ECONOMIC FACTORS
INFLUENCING
CORPORATE INTEREST
RATE IN BULGARIA

F A C U L T Y O F E C O N O M I C S A N D
B U S I N E S S A D M I N I S T R A T I O N
OVERVIEW
Why this topic
Literature review
Find the three differences
Other interesting results
Tested variables
Correlation
Tested approaches
The shortcut temptation
Results
Final thoughts
 LITERATURE REVIEW
1. Frączek B., The factors affecting the level of household savings and
their influence on economy development, (2011)

2. Handa, J., Monetary economics,(2009)

3. Janda K. and P. Zetek, Macroeconomic factors influencing interest

rates of microfinance institutions in Latin America (2013)

4. Matete J., F. Ndede and J. Ambrose, Factors Affecting Pricing of

Loanable Funds by Commercial Banks in Kenya, (2014)

5. Mihailov, M., Loans interest rates in Bulgaria: role of monetary factors

in Eurozone and influence of economic activity, BNB discussion
materials, DP/97/2014
 B U L G A R I A ≡ K E N Y A ? !
in early 90’s Kenyan economy
go through market
liberalization, fast growing
debt and vast fluctuation in
interest rates.
top 5 banks (from 43 at all)
have about 57.11% market
share.
have a private organization for
providing their goals ­ Kenya
Institute of Bankers.
Authors conclusion:
classic example of an oligopoly.
Winter of 1997.
top 5 (system) banks in
Bulgaria holds 57.66% of the
market.
have association of Bulgarian
banks with main purpose:
“coordinating and harmonizing
the interests of its members in
performing their activities,
protecting the rights and
interests of its members“.
My conclusion:
"sign for a liberal market".
 OTHER INTERESTING
RESULTS
Savings accumulated for special purposes (such as education) are
insensitive to changes in interest rate.
Savings react to the availability as well as conditions and costs of
credits.
People who accumulate large sums of money react to interest rates.
People who accumulate small sums of money don’t react to interest
rates.
People who have information about efficiency of different financial
products are more likely to react to interest rates.
TESTED VARIABLES

GVA (gross
value added)
CORRELATION
MATRIX
 TESTED APPROACHES

1. First difference And all type of

combinations of
2. Lagged values
them.
3. Composite
The results were:
variables
4. Proportions/ratios
5. Lin­Log models
6. Two stage LS
THE SHORTCUT TEMPTATION
THE SHORTCUT TEMPTATION
THE SHORTCUT TEMPTATION
FINAL MODEL
FINAL MODEL
FINAL MODEL
FINAL THOUGHTS

Q&A