The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Interest Rates

  • J. E. Ingersoll
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_866

Abstract

Interest is payment for use of funds over a period of time, and the amount of interest paid per unit of time as a fraction of the balance is called the interest rate. In some contexts, economists have found it conceptually useful to refer to a single number, the interest rate. In fact, at any point in time there are many prevailing interest rates. The rate actually charged will depend on such factors as the maturity of the loan, the credit-worthiness of the borrower, the amount of collateral, tax treatment of interest payments for both parties, and special features such as call provisions or sinking fund requirements.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • J. E. Ingersoll
    • 1
  1. 1.