Credit restrictions and the market for commercial real estate loans

Brent W. Ambrose, John Benjamin, Peter Chinloy

Research output: Contribution to journalArticle

5 Scopus citations


This paper develops a model of the market for commercial real estate loans based on the variables used by investors and lenders in property decision-making: the income capitalization (cap) rate, the debt-coverage ratio and the loan-to-value ratio. Empirical results for aggregate United States real estate originations and commitments for 1970-93 indicate that loan demand is sensitive to the cap rate and to building permit issuance. The dominant criterion used by lenders is the debt-coverage ratio as opposed to the loan-to-value ratio, a finding which may have implications for underwriting standards and credit policy.

Original languageEnglish (US)
Pages (from-to)1-22
Number of pages22
JournalReal Estate Economics
Issue number1
StatePublished - Jan 1 1996


All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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