The introduction of market-based pricing in corporate lending

We describe a recent innovation in the corporate lending business whereby banks tie the interest rate during the life of the loan to the borrowers’ credit default swap spreads or to a CDS index. We also discuss the potential impact this innovation may have on bank lending and more generally on financial intermediation and identify some potential adverse effects it may have for the stability of the financial system.

MoreLess

Year of publication:	2014
Authors:	Ivanov, Ivan ; Santos, Joao ; Vo, Thu
Published in:	Journal of Financial Perspectives. - EY Global FS Institute. - Vol. 2.2014, 1, p. 155-159
Publisher:	EY Global FS Institute
Subject:	financial intermediation \| borrowing costs \| market-based pricing

More details

Type of publication:	Article
Classification:	G21 - Banks; Other Depository Institutions; Mortgages ; G23 - Pension Funds; Other Private Financial Institutions
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010840127