This disseration focuses on the analysis of retail interest rate differentials across the euro area countries and tries to identify their underlying reasons and their implications as well. In this context we pay attention on the local nature of retail banking which sufficiently describes the heterogeneity of retail banking market and the divergence of retail financial products and services rates. The available literature points out that despite the introduction of the common currency European banking sector is still fragmented. This situation has been further deteriorated owing to the recent economic crisis across the euro area. We examine through the use of descriptive statistics the course of the composite cost-of-borrowing indicator and confirm the aforementioned findings.
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