Journal of Finance Vol. 38 No. 5 1983
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.
- DOI
- 10.1111/j.1540-6261.1983.tb03842.x
- Volume
- 38
- Issue
- 5
- Pages
- 1583-1596
- Language
- en
- Sources
- crossref openalex