Please use this identifier to cite or link to this item:
https://hdl.handle.net/20.500.14279/14710
Title: | Bank loan rate indexation in the Eurocurrency market |
Authors: | Savvides, Andreas |
metadata.dc.contributor.other: | Σαββίδης, Αντρέας |
Major Field of Science: | Social Sciences |
Field Category: | Economics and Business |
Issue Date: | 1987 |
Source: | Journal of International Money and Finance Volume 6, Issue 3, September 1987, Pages 355-371 |
Journal: | Journal of International Money and Finance |
Abstract: | This paper demonstrates that commercial bank indexation of the interest rate charged on loans to developing countries through the Eurocurrency market has differential effects on prime and non-prime borrowers. If loan contracts are indexed, the interest rate adjustment to non-prime borrowers, following an increase in the cost of funds to the bank, will be greater than that which a profit-maximizing bank would desire. As a result, it is proposed that the proportion of loan commitments drawn down by non-prime borrowers declines when the cost of bank funds rises. An analysis with data from developing-country borrowings confirms this proposition. © 1987. |
URI: | https://hdl.handle.net/20.500.14279/14710 |
ISSN: | 02615606 |
DOI: | 10.1016/0261-5606(87)90007-6 |
Rights: | © 1987 Elsevier |
Type: | Article |
Affiliation : | Oklahoma State University |
Publication Type: | Peer Reviewed |
Appears in Collections: | Άρθρα/Articles |
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