INTEREST RATE CEILINGS AND THE ROLE OF SECURITY AND COLLECTION REMEDIES IN LOAN CONTRACTS

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 equations of a supply‐demand model es...

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Bibliographic Details
Published in:Economic inquiry 1990-04, Vol.28 (2), p.317-334
Main Author: Manage, NEELA D.
Format: Article
Language:English
Subjects:
Architectural elements
Collateral
Collection (Accounting)
Collections
Credit
Economic aspects
Effects
Interest rates
Loan agreements
Loans
Regulation
Roles
Social research
State regulation
Statistical analysis
Studies
Variables
Citations: Items that this one cites
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Summary: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 equations of 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 associated with a higher interest rate.
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1990.tb00819.x