The Journal of Applied Business Research Volume 19, Number 4
49
Fixed Or Variable Rate Choice
In The Commercial Bank
Business Loan Market
Manoj Athavale, Ball State University
Robert O.
Edmister, University of Mississippi
Abstract
We study the...
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The Journal of Applied Business Research Volume 19, Number 4
49
Fixed Or Variable Rate Choice
In The Commercial Bank
Business Loan Market
Manoj Athavale, Ball State University
Robert O.
Edmister, University of Mississippi
Abstract
We study the choice available to business borrowers and lenders between fixed rate and variable
rate bank loans.
Unlike previous studies that examine residential mortgage loans, this analysis
examines commercial and industrial loans.
Business loans differ in attributes from mortgage loans
and hence provide an opportunity to test determinants of the mortgage loan choice decision for
other loan types.
The diversity of business loans also permits tests of any effect which lender size
and borrower size may have on the choice decision.
Using a continuous index of preferences for
the variable rate commercial loan, we find that the determinants of the business loan choice
decision are different from the determinants of the mortgage loan choi
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