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 language | English (US) |
|---|---|
| Pages (from-to) | 1583-1596 |
| Number of pages | 14 |
| Journal | The Journal of Finance |
| Volume | 38 |
| Issue number | 5 |
| DOIs | |
| State | Published - Dec 1983 |
| Externally published | Yes |
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics