IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/86921.html
   My bibliography  Save this paper

The Transformation of Banking: Tying Loan Interest Rates to Borrowers' Credit Default Swap Spreads

Author

Abstract

Banks? practice of tying loan interest rates to borrowers? credit default swap (CDS) spreads constitutes one of the most recent financial innovations. In this post, I discuss evidence from a research project, undertaken with Ivan Ivanov and Thu Vo, showing that this practice has lowered the cost of bank credit. I also discuss some potential drawbacks of this innovation.

Suggested Citation

  • João A. C. Santos, 2014. "The Transformation of Banking: Tying Loan Interest Rates to Borrowers' Credit Default Swap Spreads," Liberty Street Economics 20140210, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:86921
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2014/02/the-transformation-of-banking-tying-loan-interest-rates-to-borrowers-credit-default-swap-spreads.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tobias Berg & Anthony Saunders & Sascha Steffen, 2016. "The Total Cost of Corporate Borrowing in the Loan Market: Don't Ignore the Fees," Journal of Finance, American Finance Association, vol. 71(3), pages 1357-1392, June.

    More about this item

    Keywords

    CDS spreads; Interest Rates; Banking;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G1 - Financial Economics - - General Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:86921. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.