Ivanov, Ivan T.; Santos, Joao A. C.; Vo, Thu - Federal Reserve Board (Board of Governors of the … - 2014
We investigate how the introduction of market-based pricing, the practice of tying loan interest rates to credit …-based pricing loans, suggesting that the decline in the cost of bank debt is explained, at least in part, by a reduction in … monitoring costs. Market-based pricing, therefore, besides reducing the cost of bank debt, may also have adverse consequences …