Loan Rates as Incentive Instruments -- by Kinda Cheryl Hachem

This paper absorbs a draft that circulated under the title "Agency Cost Determinants of Bank Risk-Taking" in 2014. Early conversations with Doug Diamond, Anil Kashyap, Gregor Matvos, Aleh Tsyvinski, and Harald Uhlig are gratefully acknowledged. I also thank seminar participants at Bank of Canada, Berkeley, Chicago Booth, Fed Board, FRB Chicago, FRB New York, Kellogg, Rice, and Santa Clara for helpful feedback. The views expressed in this paper are those of the author and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.