The Prime Premium: Is Relationship Banking Too Costly for Some?

D-O Beim

Working Papers from Columbia - Graduate School of Business

Abstract: The most important determinant of bank loan pricing is not borrower risk or other conventional variable but whether the interest rate is pegged to the Prime Rate or to a market index such as Livor. Controlling for the difference in level among such benchmarks, and for many other variables explanatory of bank loan pricing, Prime-based borrowers paid 140-150 basis points more on average during 1990-1995.

Keywords: BANKS; LOANS; INTEREST RATE (search for similar items in EconPapers)
JEL-codes: E43 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1996
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:colubu:96-22

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