Interest rates on consumer and commercial loans

This paper, using the period from May 1982 to May 1983 as a case study, will examine the reasons for the inflexibility of rates charged by banks on consumer loans relative to rates charged by banks on business loans. The first half of the paper will attempt to establish the differences, and the reasons for such differences, in changes between consumer loan rates and commercial loan charges. nnThe second half of the paper will analyze the reasons for these differences in light of bank yields on outstanding loans to consumers and businesses from 1966 through 1983. Finally, current data will be examined from the point of view of the conclusions reached in the report.,Abstract -- Executive Summary -- Introduction -- Sources of Funds for Consumer Credit -- Behavior of Bank Consumer Loan Rates. May 1982 to May 1983 ; Consumer Loan Rates in Past Recoveries ; Variability of Consumer Rates ; The Inverted Yield Curve ; The Positive Yield Curve ; Comparison with Open-Market Rates -- Interest Rate Deregulation and Consumer Loan Rates. Post-War Consumer Lending by Banks ; Regulation of Interest Rates-Regulation "Q" ; Deregulation of Interest Rates ; Effects of Deregulation ; Borrowing Short and Lending Long ; Price and Non-Price Competition ; Usury Ceilings -- Conclusions.,Helen J. Scott, Specialist in Money and Banking, Economics Division,CRS 85-818 E,"May 17, 1985.",SuDoc# 14. 18/3