A Model of the Commercial Loan Rate

MYRON B. SLOVIN, Marie Sushka

Research output: Contribution to journalArticle

54 Citations (Scopus)

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. 1983 The American Finance Association

Original languageEnglish (US)
Pages (from-to)1583-1596
Number of pages14
JournalJournal of Finance
Volume38
Issue number5
DOIs
StatePublished - 1983
Externally publishedYes

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Loan rates
Commercial banks
Assets
Liability
Financial intermediaries
Imperfect competition
Finance
Monopolistic competition

ASJC Scopus subject areas

  • Accounting
  • Economics and Econometrics
  • Finance

Cite this

A Model of the Commercial Loan Rate. / SLOVIN, MYRON B.; Sushka, Marie.

In: Journal of Finance, Vol. 38, No. 5, 1983, p. 1583-1596.

Research output: Contribution to journalArticle

SLOVIN, MYRON B. ; Sushka, Marie. / A Model of the Commercial Loan Rate. In: Journal of Finance. 1983 ; Vol. 38, No. 5. pp. 1583-1596.
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