The Determinants of New Business Loans Interest Rate In ARIMA, ARIMAX, And ARDL Approach
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Abstract
This study investigates the determinants of interest rates for new business loans in Thailand. This study explores the impact of traditional economic indicators and new digital finance variables on lending rates. As such, this study aims to extend the literature on lending rates by means of a wide set of economic indicators, namely commercial bank loans, net traded value, electronic money transactions, and average wages. This study employs the ARIMA, ARIMAX, and ARDL models to suit autoregressive, external, and lagged exogenous impacts. Analysis was performed on monthly data from January 2012 to April 2024 obtained from the Bank of Thailand. The findings show the considerable influence of historical relationships in new business loan interest rates on current rates. Commercial bank loans also have a significantly inverse relationship with interest rates. Given these results, the central and private banks that participate greatly in the finance sector could strategically employ loan volume to offer attractive rates. This would not only promote banks to function more smoothly, but also help the economy grow itself.
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