Understanding Credit Demand: Exploring the Impact of Leverage and Return on Borrowing

Graha Yudha, Rolan Dahlan, Ismail Zulkarnain and Achmad Nugraha

MPRA Paper from University Library of Munich, Germany

Abstract: This study presents a conceptual framework for analyzing the relationship between firm returns and credit demand. By examining the conditional distributions of return on borrowing and leverage, the framework investigates how changes in interest rates and the maximum leverage provision impact credit demand. The study emphasizes the role of the mean and standard deviation of these distributions and introduces the concept of elasticity to quantify the responsiveness of credit demand. The findings provide valuable insights for policymakers in understanding the dynamics of credit demand and formulating effective economic policies. The framework offers a useful tool to assess the implications of interest rate and leverage provision changes on credit demand and support sustainable economic growth in the credit market.

Keywords: credit demand; interest rate policy; distribution of leverage; economic policy. (search for similar items in EconPapers)
JEL-codes: E41 E43 E44 E51 E52 (search for similar items in EconPapers)
Date: 2025-04-15
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/126281/1/MPRA_paper_126281.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:126281

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().