Sarmiento, Camilo - In: Applied financial economics 19 (2009) 1/3, pp. 175-182
Risk-based pricing is an alignment of loan risk pricing with expected loan risk - charging a higher interest rate for higher risk (Yezer, 2002). This article shows systematic relaxation of risk pricing for sub-prime loans during the US housing bubble, a period that extended from 2001 to 2006....
