This paper uses a variety of estimation methods to explore the empirical relationship between interest rate and collateral requirements in bank loan contracts. Methods that do not allow for endogenous contract terms detect a positive reciprocal association between interest rate and collateral. Methods that allow for endogenous contract terms point to a strong positive effect of interest rate on collateral but the effect of collateral on interest rate is weaker. This highlights the importance of incorporating the endogenous nature of contract terms in empirical work.

Estimating the relationship between collateral and interest rate: A comparison of methods

Germana Giombini;
2021

Abstract

This paper uses a variety of estimation methods to explore the empirical relationship between interest rate and collateral requirements in bank loan contracts. Methods that do not allow for endogenous contract terms detect a positive reciprocal association between interest rate and collateral. Methods that allow for endogenous contract terms point to a strong positive effect of interest rate on collateral but the effect of collateral on interest rate is weaker. This highlights the importance of incorporating the endogenous nature of contract terms in empirical work.
File in questo prodotto:
File Dimensione Formato  
1-s2.0-S154461232100043X-main.pdf

accesso aperto

Tipologia: Versione editoriale
Licenza: Creative commons
Dimensione 363.5 kB
Formato Adobe PDF
363.5 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11576/2688804
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 4
  • ???jsp.display-item.citation.isi??? 4
social impact