The impact of interest rate liberalization on loan pricing efficiency: Theory and evidence

IF 7.5 1区经济学 Q1 BUSINESS, FINANCE

International Review of Financial Analysis Pub Date : 2025-03-29 DOI:10.1016/j.irfa.2025.104207

Wen Chen , Guangzi Li , Jianxiong Liu

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Abstract

Based on the concepts of transaction and relationship loans, we derive a loan pricing model under interest rate regulation and analyze the effect of removing the cap and the floor in interest rate regulations on loan pricing efficiency. Our model shows that the impact on loan pricing efficiency of lifting the cap on loan interest rates is not definite, whereas removing the floor on loan interest rates significantly improves loan pricing efficiency. An important mechanism for improving loan pricing efficiency by removing the floor is that this change has encouraged more borrowers to shift from relationship loans to transaction loans, thereby reducing the banks' monopoly pricing power over borrowers. Our empirical analyses using a sample of loan contracts at Chinese listed firms around the time of interest rate deregulation support the model predictions. Collectively, our results suggest that liberalization of interest rate caps increases demand for relationship loans and thus might or might not increase loan pricing efficiency, depending on the monopoly power of banks. Our findings contribute to the policy of liberation interest rate regulation.

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利率市场化对贷款定价效率的影响：理论与证据

基于交易贷款和关系贷款的概念，推导了利率调控下的贷款定价模型，并分析了取消利率上限和下限对贷款定价效率的影响。我们的模型表明，取消贷款利率上限对贷款定价效率的影响是不确定的，而取消贷款利率下限显著提高了贷款定价效率。通过取消最低限额来提高贷款定价效率的一个重要机制是，这一变化鼓励更多的借款人从关系贷款转向交易贷款，从而降低了银行对借款人的垄断定价权。我们使用利率放松前后中国上市公司贷款合同样本进行的实证分析支持了模型的预测。总的来说，我们的研究结果表明，利率上限的自由化增加了对关系贷款的需求，因此可能会或可能不会提高贷款定价效率，这取决于银行的垄断力量。本文的研究结果对我国放开利率调控政策有一定的借鉴意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Review of Financial Analysis BUSINESS, FINANCE-

CiteScore

10.30

自引率

9.80%

发文量

366

期刊介绍： The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.