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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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