Fixed versus variable rate financing: The influence of borrower, lender, and market characteristics

Lawrence G. Goldberg, Andrea J. Heuson

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

Previous research has analyzed the problem faced by borrowers who must choose between fixed rate and variable rate loans when each loan carries different cost and risk characteristics and the borrowers face various income and employment prospects. In addition, the existing literature contains theoretical and empirical studies of how lenders react when given the ability to offer both fixed and variable rate financing. This article unifies the two strands of research to develop and test a model of the equilibrium proportion of variable rate lending. Results indicate that factors related to borrower, lender, and market characteristics are significant determinants of the equilibrium proportion of variable rate credit originated.

Original languageEnglish (US)
Pages (from-to)49-60
Number of pages12
JournalJournal of Financial Services Research
Volume6
Issue number1
DOIs
StatePublished - May 1 1992

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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