Loan Commitment Contracts, Terms of Lending, and Credit Allocation

ARIE MELNIK; STEVEN PLAUT

doi:10.1111/j.1540-6261.1986.tb05046.x

Loan Commitment Contracts, Terms of Lending, and Credit Allocation

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Abstract

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 language	English
Pages (from-to)	425-435
Number of pages	11
Journal	Journal of Finance
Volume	41
Issue number	2
DOIs	https://doi.org/10.1111/j.1540-6261.1986.tb05046.x
State	Published - Jun 1986

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1111/j.1540-6261.1986.tb05046.x

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Loan Commitment Contracts, Terms of Lending, and Credit Allocation

Abstract

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