Loan Commitment Contracts, Terms of Lending, and Credit Allocation

Research output: Contribution to journalArticlepeer-review


This paper analyzes the structure of loan commitment contracts and the interrelationships among their component parameters. Lenders offer borrowers a set of loan “packages,” from which the latter may choose that “package” found to be most appealing. Borrowers may “trade off” changes in any loan parameter in exchange for other adjustments. The borrower, at this time, may “purchase” a larger credit ration for a price. Supporting empirical evidence is presented. 1986 The American Finance Association

Original languageEnglish
Pages (from-to)425-435
Number of pages11
JournalJournal of Finance
Issue number2
StatePublished - Jun 1986

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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