A note on the spread between the rates of fixed and variable rate loans
Article Abstract:
A model is derived for the optimal expected spread between the rates of fixed and variable rate loans of a risk-averse bank. Findings indicate that the spread directly varies with funding cost volatility, the bank's aversion to risks and the profit margin on variable rate loans. The optimal mix of fixed and variable rate lending is also analyzed in the loan portfolio of a bank.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1995
User Contributions:
Comment about this article or add new information about this topic:
The discount window and credit availability
Article Abstract:
A model was presented which illustrate the effect of the discount window on the decisions of banks confronting regulatory capital requirements and stochastic deposit supply. It was shown that banks have the tendency to select a larger lending capacity whenever the discount window is available. Banks also have the tendency to avoid the window whenever the cost of capital is higher during recessions. Such possibility may result to a market downturn.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Critique of the neoclassical theory of growth and distribution. Is the natural rate of growth exogenous?
- Abstracts: Avia has to face a danger of bankruptcy proceedings for the reason of the 2000 loss. Skoda and VW: 10 years of the conquest of Europe
- Abstracts: Bank behavior based on internal credit ratings of borrowers. Generally accepted rating principles: a primer
- Abstracts: The implications for the new capital adequacy rules for portfolio management of credit assets. Parameterizing credit risk models with rating data
- Abstracts: Moody's investors service response to the consultative paper issued by the Basel Committee on Bank Supervision "A new capital adequacy framework"