Unintended Impact of LIBOR-SOFR Transition on Credit Markets and Economic...
March 10th, 2023 | In Research Note
In this note, I discuss the impact of the London Interbank Offered Rate (LIBOR) transition on credit lines, bank lending, and economic activity. I highlight the potential unintended impact of transitioning from credit sensitive reference rates to risk-free reference rates. The focus is on LIBOR transition in the U.S. where the near risk-free reference rate is the Secured Overnight Financing Rate (SOFR). It is well-known that credit…
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