ABERDEEN, S.D. –?A new article by Dr. Keun Lee, professor of economics at Northern State University, has been accepted for publication in the?International Journal of Finance and Banking Studies.
The article, titled Three Interest Rate Theories, will appear in an upcoming volume of the peer-reviewed journal.
In the paper, Dr. Lee explores both the general and academic views of interest rates—one as the cost of borrowing and reward for savings, and the other as a monetary phenomenon determined by the balance between money demand and supply. While these perspectives might seem fundamentally different, the article argues they are more aligned than traditionally believed.
“The history of the interest rate dates back to the Hammurabi Code, written around BC 1800, which set it at 33 1/3% for grain loans and 20% for silver loans. In the modern economy, authorities do not set the interest rate, but market forces dictate it. Aside from its long history and its setting, there have also been a variety of views on its true nature, which I find intriguing. The paper considers three relatively recent views on the interest rate and examines how they differ and why,” said Dr. Lee.