The Introduction of Market-Based Pricing in Corporate Lending

10 Pages Posted: 1 Dec 2017

See all articles by Ivan Ivanov

Ivan Ivanov

U.S. Securities and Exchange Commission - Division of Economic and Risk Analysis

João A. C. Santos

Federal Reserve Bank of New York

Thu Vo

Independent

Date Written: March 27, 2014

Abstract

We describe a recent innovation in the corporate lending business whereby banks tie the interest rate during the life of the loan to the borrowers’ credit default swap spreads or to a CDS index. We also discuss the potential impact this innovation may have on bank lending and more generally on financial intermediation and identify some potential adverse effects it may have for the stability of the financial system.

Suggested Citation

Ivanov, Ivan and Santos, João A. C. and Vo, Thu, The Introduction of Market-Based Pricing in Corporate Lending (March 27, 2014). Journal of Financial Perspectives, Vol. 2, No. 1, 2014, Available at SSRN: https://ssrn.com/abstract=3078733

Ivan Ivanov (Contact Author)

U.S. Securities and Exchange Commission - Division of Economic and Risk Analysis ( email )

United States Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
United States

João A. C. Santos

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5583 (Phone)
212-720-8363 (Fax)

HOME PAGE: HTTP://WWW.NEWYORKFED.ORG/RMAGHOME/ECONOMIST/SANTOS/CONTACT.HTML

Thu Vo

Independent ( email )

No Address Available
United States

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