The Relationships Among Interest Rates, Collaterals, and Borrowers’ Types: A Case Study of Taiwanese Commercial Bank

• Main Authors: Yu-Ching Wu, 吳玉菁
• Other Authors: Hai-Chin Yu
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/41071295071024165367

碩士 === 中原大學 === 國際貿易研究所 === 95 === Using three-stage-least-square (3SLS) method, this paper investigates the relationships between interest rates, collaterals, and borrowers’ characteristics. Our samples of 201 effective observations are obtained from a private commercial bank department of loan during 2002-2005. Some interesting findings conclude below. 1) A significantly negative correlation is found between interest rate and collateral; 2) The loan type of trading case have significantly higher interest rate than the loan type of non-trading case; 3) The loan case without banking relationship have higher interest rate than the loan case with banking relationship; 4) Borrowers’ occupations which are soldiers, teachers, public servants or working in large corporations have significantly lower interest rates and lower collateral, they are advantageous; 5) The loan ration shows a significantly negative relationship on interest rate and collateral; 6) The large the loan amounts, the higher the collateral value is required no matter what the interest rate is set to. Finally, after grouping the full sample to three types of borrowers-high medium, and low risk, we find their background characteristics are significantly different. Especially, low risk borrowers are offered significantly lower interest rate than other two types of borrowers. It also implies the asymmetric information problem does not exist in domestic loan markets.