We question the conceptual foundations of  so-called “Beta Rate” models and related “Beta Factors” applied to non-maturity deposits.
We conclude that:
* Beta models of NMD rates are simplistic
* They are neither analytically robust, nor stable
* They produce inconsistent results that depend on whether interest rates are rising or falling
*  They are sensitive to the current starting deposit rates

We examine and discuss a readily-available and widely respected alternative, the Partial Adjustment Model.

Beta Models and NMD Rates