Loan price modelling for local governments using risk premium analysis

Autor:	Salvador Rayo-Cantón, Dionisio Buendía-Carrillo, Andrés Navarro-Galera, Juan Lara-Rubio
Rok vydání:	2015
Předmět:	Finance Economics and Econometrics business.industry media_common.quotation_subject Discount points Interest rate Term loan Loan Economics Non-conforming loan Non-performing loan business Rule of 78s media_common Credit risk
Zdroj:	Applied Economics. 47:6257-6276
ISSN:	1466-4283 0003-6846
DOI:	10.1080/00036846.2015.1068924
Popis:	Previous studies have highlighted the question of government loan interest as one of great current importance. Government borrowing levels are high, and reducing interest payments would generate savings to meet other spending needs and/or to lower taxation, thus supporting the sustainability of public finances. However, no previous study has presented a method for a local government to calculate its own credit risk and thus be in a position to negotiate lower interest rates on its borrowing. This article defines a financial model that enables local governments to estimate the interest rate payable on a bank loan, based on their credit risk premium, in accordance with the Basel II rules and the findings of our empirical study of large local governments.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::5566ed618d1bcfee3f63f087c5d25c9d https://doi.org/10.1080/00036846.2015.1068924 Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
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