Notice that if for example the personal exposure (q) knows the benefit on offer will get 0. After that just the influenced debtors tend to repay early, if the ex lover post interest rate remains highest. However in the outcome of a lessening rate of interest every debtors tend to pay off early. Those having who the main benefit in the offer remains b have a tendency to pay off early and take upwards a different borrowing during the less rate of interest. Others, having who the non-public chance has realized will additionally pay off early. In their mind brand new acquire regarding price was 0.

They reinvests this new reduced loan at the same interest rate as the the latest credit speed

In the model a risk premium exists only for the first credit and not for the second credit. If the debtor takes up the second credit at the low interest rate ( \(_<2l>)\) the interest rate cannot-by assumption-decline any more in future. Leer Más →