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Minimum quantitative requirements for commercial lending with interest rate caps: The case of Argentina

Author

Listed:
  • Mario Ravioli

    (Universitat Rovira i Virgili)

Abstract

In 2012, Argentina passed a regulation imposing a minimum level of commercial lending on large banks. The regulation was meant to boost lending to SMEs in less favored regions via improved credit availability and capped interest rates, with the ultimate goal of spurring private investment. This paper studies two outcomes of the aforementioned regulation. First, using a difference-in- difference setup, it studies the degree to which this regulation fostered credit supplied by those banks affected by the new rules, and the speed of loan creation.Second, it investigates the performance of loans created as a result of the regulation. Overall, the paper highlights the potential bright and dark sides of imposing supply of banking services and products on private banks.

Suggested Citation

  • Mario Ravioli, 2016. "Minimum quantitative requirements for commercial lending with interest rate caps: The case of Argentina," Proceedings of International Academic Conferences 4006626, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:4006626
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    File URL: https://iises.net/proceedings/24th-international-academic-conference-barcelona/table-of-content/detail?cid=40&iid=075&rid=6626
    File Function: First version, 2016
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    Cited by:

    1. Ran Tao & Jiayue Chai & Bikash Koli Dey, 2022. "A Three-Stage Game Analysis of Private Lending Rate Ceiling: Necessity, Impact, and Solution," Advances in Operations Research, Hindawi, vol. 2022, pages 1-9, August.

    More about this item

    Keywords

    Interest rate caps; Priority lending schemes; Directed credit; SMEs;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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