A simple enquiry on heterogeneous lending rates and lending behaviour

......lend.rate from b.3 to cl

’lend.rate from b.3 to c3

———from b.3 to c4

--------lend.rate from b.3 to c5

AREA 6

4. Some simple econometrics

Heterogeneity in bank credit and lending rates has been analysed in many different ways, as
briefly discussed in section 2. The approach followed here is both unconventional and very simple. The
first equation estimated (and shown in sub-section 4.1) is meant to investigate on the main determinants
of heterogeneity in lending rates, for a given policy regime and is based on a simple “textbook” statement:
when monetary policy is mainly based (like in the Italian context) on the control of interest rates, the rate
of discount does not only display general attitude of the policy makers, but also constitutes a “topical”
interest rate affecting the whole set of lending rates. The level of the latter will depend on the borrower
risk, competitive context, and demand expectations. In other words, we study the spread between each
specific lending rate (from each size class of lenders to each loan size class, in each geographic area and

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