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- Title
INTEREST RATE CEILINGS AND THE ROLE OF SECURITY AND COLLECTION REMEDIES IN LOAN CONTRACTS.
- Abstract
Collateral or other security for personal loans and restrictions on creditor remedies for the collection of debts have varying effects on the price and quantity of credit which depend in turn on the level of interest rate ceilings. We report here on reduced-form equationsof a supply-demand model estimated for five states with different interest rate restrictions. Interest rate ceilings limit how far lenders can raise loan rates to compensate for expected default losses but restrictions on collection remedies are generally associatedwith a higher interest rate.
- Subjects
INTEREST rates; LOMBARD loans; DEBT
- Publication
Economic Inquiry, 1990, Vol 28, Issue 2, p317
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.1990.tb00819.x