RATE CEILINGS, MARKET STRUCTURE, AND THE SUPPLY OF FINANCE COMPANY PERSONAL LOANS.

Recent research has established that finance companies accept poorer credit risks for personal loans where legal rate ceilings are higher. This finding suggests that the volume of personal loans extended or outstanding might also be positively associated with legal rate ceilings, but the supply of finance company personal loans has displayed positive, negative, and zero correlations with interest rate levels. There are two major reasons for this past chaos concerning supply: The credit data utilized have been faulty, and the model specifications have been inadequate. The purpose of this paper is to overcome these deficiencies. The first section below contains a brief description of the credit data that will be employed. The second section contains our model specifications. The test results are presented in section three. [ABSTRACT FROM AUTHOR]