Borrower income and loan rates in the credit market of Lima

Luis Felipe Zegarra

doi:10.1080/20780389.2021.1962705

Borrower income and loan rates in the credit market of Lima

Luis Felipe Zegarra

Research output: Contribution to journal › Article › peer-review

Abstract

I analyse the effect of borrower income on loan rates in the credit market of Lima in 1840–65. I show that borrower income had a negative effect on interest rates. Borrower income influenced interest rates mostly through the impact on loan sizes: richer borrowers received larger loans and larger loans were associated with lower loan rates. The results are consistent with the influence of economies of scale on lending and differences in risk between large and small borrowers.

Original language	English
Pages (from-to)	147-169
Number of pages	23
Journal	Economic History of Developing Regions
Volume	37
Issue number	2
DOIs	https://doi.org/10.1080/20780389.2021.1962705
State	Published - 2022
Externally published	Yes

Keywords

Credit
firm size
loan rates
moneylending

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10.1080/20780389.2021.1962705

Cite this

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title = "Borrower income and loan rates in the credit market of Lima",

abstract = "I analyse the effect of borrower income on loan rates in the credit market of Lima in 1840–65. I show that borrower income had a negative effect on interest rates. Borrower income influenced interest rates mostly through the impact on loan sizes: richer borrowers received larger loans and larger loans were associated with lower loan rates. The results are consistent with the influence of economies of scale on lending and differences in risk between large and small borrowers.",

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AB - I analyse the effect of borrower income on loan rates in the credit market of Lima in 1840–65. I show that borrower income had a negative effect on interest rates. Borrower income influenced interest rates mostly through the impact on loan sizes: richer borrowers received larger loans and larger loans were associated with lower loan rates. The results are consistent with the influence of economies of scale on lending and differences in risk between large and small borrowers.

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KW - loan rates

KW - moneylending

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Borrower income and loan rates in the credit market of Lima

Abstract

Keywords

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