Abstract
Outlines the provisions of the US Federal Deposit Insurance Corporation Improvement Act (1991) (FDICIA) and presents a study of its effects on banks and their customers. Develops a mathematical model to identify the factors contributing to the price of loans and applies it to 1977‐98 data from large and small banks. Shows that charges are affected by loan size, bank size and FIDICIA cost effects; with especially high margins in the middle market. Rejects the idea that higher interest rates are linked to increased loan defaults.
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