Loans on sale: Credit market seasonality, borrower need, and lender rents

Justin Murfin and Mitchell Petersen

No 20310, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The market for corporate credit is characterized by significant seasonal variation, both in interest rates and the volume of new lending. Firms borrowing from banks during seasonal "sales" in late spring and fall issue at 19 basis points cheaper than winter and summer borrowers. Issuers during cheap seasons appear to have less immediate or uncertain needs, but are enticed by low rates to engage in precautionary borrowing. High interest rate periods capture borrowers with unanticipated, non-deferrable investment needs. Consistent with models of intertemporal price discrimination, seasonality is strongly associated with market concentration among a few large banks with repeated interactions.

JEL-codes: G21 G32 L1 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-ban and nep-cfn
Note: CF IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Justin Murfin & Mitchell Petersen, 2016. "Loans on sale: Credit market seasonality, borrower need, and lender rents," Journal of Financial Economics, .

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Journal Article: Loans on sale: Credit market seasonality, borrower need, and lender rents (2016)
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