WIBOR is a component of debt prices that determines the interest rate on loans over different periods (for example, three-month WIBOR determines the interest rate on a loan for three months). WIBOR is usually lower than interest rates given by banks, but it is also higher than interest rates given by the government.
What is WIBOR? Definition of the term
WIBOR is the averaged interest rate on foreign currency loans granted by banks in Poland. WIBOR is the basis for calculating the interest rate on a loan, as determined by the customer. This means that the interest rate on the loan is determined by the amount of the current WIBOR.
WIBOR is valued daily by the Polish Banking Association. Banks determine it based on individual interest rate offers given by other banks. This is a relatively accurate way of valuing the interest rate on a loan in Polish currency.
The current WIBOR is published in the media and available on the Polish Banking Association’s website. WIBOR changes from day to day depending on the current economic and market situation and inflation.
How does WIBOR work?
How does WIBOR work? To begin with, banks in Poland submit information to the Polish Banking Association on the prices of loans granted by banks. Then, from this data, an average index is created, which is called WIBOR. WIBOR is published every day.
In addition to this, banks have a choice between using WIBOR and other interest rates for their loans. WIBOR is often used as the base interest rate, but banks also have the option of choosing a higher or lower interest rate, depending on the situation.
Using WIBOR is beneficial for both banks and their customers. Banks can adjust interest rates to the level of risk that is associated with the loan, and customers have the opportunity to compare the interest rates offered by banks. With WIBOR, customers can choose the most favorable offer for themselves.
What does WIBOR depend on?
The WIBOR index is of great importance for the financial market in Poland, as it serves as the main source of information about market interest rates. It is also used to determine the interest rate on loans and credits granted by banks. All this information allows investors to better understand the financial market and manage their investments.
However, in order to understand what WIBOR depends on, it is necessary to know its components. WIBOR is composed of three factors. First, there is the prime rate, which is determined by the National Bank of Poland (NBP). Second, there are bank margins, which are set by banks depending on their business strategy. Third, are the costs of risk, which are priced by banks based on their creditworthiness.
To ensure the stability of WIBOR, the NBP monitors it and adjusts it according to current market needs. When the WIBOR level rises, it means that banks believe that lending money is becoming riskier and therefore raise interest rates. Otherwise, when the WIBOR level falls, it means that banks consider it less risky to lend money and therefore lower interest rates.
WIBOR – how to calculate it?
WIBOR stands for the Wielkopolska Bank Interest Rate Index. It is an index used in the Polish banking system to determine interest rates on bank deposits, loans and other financial products. WIBOR is a rather complicated and complex index, so many people do not know how to calculate it. In this article we will discuss step by step how to calculate WIBOR.
First of all, it is important to understand that WIBOR is an interest rate indicator that is calculated based on the market assessment by Polish banks. For this reason, to calculate WIBOR, you need to have access to market information and know how to interpret it.
The next step is to determine what value of WIBOR you want to calculate. WIBOR can be calculated for different periods, such as 1, 3, 6 or 12 months. Then you need to find market information for the chosen period, such as interest rates, deposit rates, etc.
Once we have access to market information, we can calculate WIBOR. The principle is simple: you need to calculate the arithmetic average of all interest rates reported by banks in the selected period. The arithmetic average is calculated by dividing the sum of all interest rates by the number of banks that reported them.
The final step is to adjust the arithmetic average to get the WIBOR value. The adjustment consists of adding 0.25% to the arithmetic average. For example, if the value of the arithmetic average is 2%, the WIBOR value will be 2.25%.
As we can see, calculating WIBOR is not difficult, but it requires knowledge of the financial market and the ability to interpret market information. However, it is worth investing some time in understanding the WIBOR index and in calculating it, as this will affect better management of our finances.
