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Commercial Bank Maturity Demand for United States Government Securities and the Determinants of the Term Structure of Interest Rates**

Published online by Cambridge University Press:  19 October 2009

Laurence Jay Mauer
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Extract

The determination of the term structure of interest rates, a subject of much controversy in recent years, has emphasized two principal viewpoints: the expectations hypothesis stresses the importance of expectations of future yields as determining the present term structure of interest rates; and the liquidity hypothesis emphasizes the greater “moneyness” of short-term debt as opposed to long-term debt. These main theories provide certain unique insights into the term structure; the acceptance of one need not require the rejection of the other. And the factors they stress at least hold the possibility of simultaneously influencing the term structure of interest rates.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 4 , Issue 1 , March 1969 , pp. 37 - 52
Copyright
Copyright © School of Business Administration, University of Washington 1969

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