Inflation Versus Prime Lending Rates: An Empirical Analysis

Authors

  •   Deepa Chandran Research Scholar, Research & PG Department of Commerce, St. Joseph's College, Irinjalakuda, Thrissur, Kerala - 680121
  •   Philo Francis Associate Professor, Research Guide, and H.O.D, Research & PG Department of Commerce, St. Joseph's College, Irinjalakuda, Thrissur, Kerala - 680121

DOI:

https://doi.org/10.17010/ijf/2014/v8i2/71976

Keywords:

ICICI Benchmark Advance Rate

, Inflation, Prime Lending Rates, State Bank Advance Rate

E31

, E43, E52, E58

Paper Submission Date

, June 20, 2013, Paper sent back for Revision, September 19, Paper Acceptance Date, October 29, 2013.

Abstract

The inflation rate in our country increased significantly during the last six years. The Reserve Bank of India has been using high interest rate policies to contain the excessive instability and the excessive money supply in the economy. In this context, the present study has attempted to analyze the relationship between inflation rate and prime lending rate in India. The study was mainly limited to the prime lending rates of SBI and ICICI Bank. The time period of the study is from 2004 to 2011. For the purpose of analysis, the inflation rate was compared with the prime lending rates of SBI and ICICI Bank with the help of correlation, regression, and ANOVA tools. The analysis lead to the finding that for most of the years, inflation and prime lending rates of the 2 banks were negatively correlated. However, after testing the fit of the regression line, a conclusion was at arrived that there was no significant relationship between inflation rates and SBAR; whereas, there was a significant relationship between inflation rates and IBAR. Thus, the study tries to provide necessary guidance regarding the relationship between the inflation rates and the prime lending rates.

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Published

2014-02-01

How to Cite

Chandran, D., & Francis, P. (2014). Inflation Versus Prime Lending Rates: An Empirical Analysis. Indian Journal of Finance, 8(2), 5–14. https://doi.org/10.17010/ijf/2014/v8i2/71976

Issue

Volume 8, Issue 2, February 2014

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

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