Inertia and Pass-Through in Retail Deposit Markets

This paper investigates heterogeneous pass-through of monetary policy rates to variable-rate savings accounts using monthly account-level panel data from a Dutch comparison website. I find incomplete and delayed pass-through that varies widely across banks but even account products offered by the same bank. Bank-specific factors explain less than half of the variation in pass-through rates. Within banks, internet-managed and newer accounts capturing market segments with more flexible consumers exhibit substantially higher pass-through than regular and older accounts. This suggests an important role of inertia for incomplete monetary transmission.