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A Model of the Commercial Loan Rate
Abstract
This paper explores the theoretical and empirical determinants of the commercial loan rate charged by commercial banks based on a model of financial intermediary behavior which assumes monopolistic competition in asset and liability markets. The model incorporates the constraint that banks must maintain at least a minimum quantity of bonds in asset portfolios. Equations are estimated on a time series basis to explain the behavior of commercial loan rates over the period 1953 to 1980. The evidence appears consistent with the hypothesis that commercial banks operate in a market characterized by imperfect competition and that they explicitly set loan rates.
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“A number of empirical studies found evidence that bank loan rates to business are sticky, providing some support for equilibrium rationing (Slovin and Sushka, 1983;King, 1986;So®anos et al., 1990).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Slovin and Sushka, 1983
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No references could be resolved yet.
Research works printed but not linked: 17
- 10.2307/1909556 · DOI
- 10.1515/9780691188485 · DOI · Paper page
- Goldfeld Stephen, 1966, Commercial Bank Behavior and Economic Activity
- Goldfeld Stephen, 1969, The Brookings Model: Some Further Results
- Goldfeld Stephen, 1970, Studies in Economic Stabilization
- 10.1111/j.1540-6261.1970.tb00526.x · DOI
- Hester Donald, 1967, Studies of Portfolio Behavior
- Jacobs Donald, 1971, Business Loan Costs and Bank Market Structure
- Jaffee Dwight, 1971, Credit Rationing and the Commercial Loan Market
- Jaffee Dwight, 1969, “A Theory and Test of Credit Rationing.”, American Economic Review
- Johnston J., 1972, Econometric Methods
- 10.2307/1991279 · DOI
- 10.2307/1991004 · DOI
- Monti M., 1972, Mathematical Methods in Investment and Finance
- 10.2307/1991116 · DOI
- Slovin Myron, 1975, Interest Rates on Savings Deposits
- 10.1016/0304-3932(79)90015-1 · DOI
Cited by
Sorted by citations
N. Berger, A., & F. Udell, G. (1998) · Journal of Banking & Finance · doi:10.1016/s0378-4266(98)00038-7 · Cited by 3,690
Some evidence on the empirical significance of credit rationing
Berger, A. N., & Udell, G. F. (1992) · Journal of Political Economy · doi:10.1086/261851 · Cited by 550
Metadata
- Authors
- SLOVIN, M. B., & SUSHKA, M. E.
- Affiliations
- Georgia Institute of Technology (US)
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1983-12
- Volume
- 38
- Issue
- 5
- Pages
- 1583-1596
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W1981016484
- Cited by
- 96
- References
- 0
- Citations by year
- 2024: 1 · 2023: 2 · 2022: 3 · 2021: 3 · 2019: 3 · 2018: 1 · 2017: 3 · 2016: 2 · 2015: 7 · 2014: 2 · 2013: 4 · 2012: 5
- FWCI
- 4.04
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Journal of Finance (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Keywords
- bank lending rates, financial intermediation, monopolistic competition, bond holdings, imperfect competition, determinants of interest rates
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