Navigating Interest Rate Flux: Evidence from South and Southeast Asia

As a driver of savings, consumption, and investment, interest rate plays a crucial role in an economy, while the fluctuation of lending interest rate depends on many factors. Various studies explored the impacts of different factors on lending interest rate flux and found heterogeneous results. Moreover, most of the earlier studies applied diverse predetermined research methods, either linear or non-linear, without aiming at any automated or self-regulated research technique. Therefore, this study explores the influencing factors of lending interest rate using symbolic regression, an automated research technique, in the case of South and Southeast Asian countries for the period 1985-2022. The applied method digs out the dominant factors that influence lending interest rate and reveals that economic growth is the most influential factor in South and Southeast Asian countries, followed by broad money growth, inflation, real interest rate, and others. Some policy implications are also discussed based on the results.