Lending or placement rate
It is the interest rate that financial intermediaries receive from the applicants for the loans granted. That is, the one that the bank charges you for the money it lends you.
Deposit or deposit rate
It is the interest rate paid by financial intermediaries to resource providers for the money raised. That is, the one that the bank pays you for your deposits.
When it comes to international credits, the active rate is composed of the cost of funds (American Treasury Bonds + Country Risk + Devaluation Risk) plus the risk of the loan (risk of default by the company + risk of liquidity, product of an unexpected withdrawal of deposits + administrative costs of the bank to grant credits). It can be written as:
i (Active) = T-bill + Devaluation risk + Country risk + other types of risk
Bibliography
- Ortíz Soto, Oscar Luis. Money: theory, politics and institutions, Faculty of Economics UNAM, 2001.Schettino Yañez, Macario. Mexico: Social, Political and Economic Problems. Pearson Education, 2002, p.3
