Borrower income and loan rates in the credit market of Lima. Issue 2 (4th May 2022)

• Record Type: Journal Article
• Authors: Zegarra, Luis Felipe
• Is Part Of: Economic history of developing regions. Volume 37:Issue 2(2022)
• Page Start: 147
• Page End: 169
• Publication Date: 2022-05-04
• Subjects: Credit -- moneylending -- loan rates -- firm size; G21 -- E43 -- L25 -- N26; Developing countries -- Economic conditions -- Periodicals; Africa, Southern -- Economic conditions -- Periodicals; Economic history -- Periodicals; Economic history; Africa, Southern; Periodicals; Electronic journals; 330.091724
• DOI: 10.1080/20780389.2021.1962705
• Languages: English
• ISSNs: 2078-0389

Abstract

ABSTRACT: I analyse the effect of borrower income on loan rates in the credit market of Lima in 1840–65. I show that borrower income had a negative effect on interest rates. Borrower income influenced interest rates mostly through the impact on loan sizes: richer borrowers received larger loans and larger loans were associated with lower loan rates. The results are consistent with the influence of economies of scale on lending and differences in risk between large and small borrowers.