Minimum margin requirements

Order by the central bank – as in the U.S.A. – or the supervisory authority that in the – installment purchase of long-term consumer goods, – credit purchase of securities, especially stocks, the purchaser must pay a certain percentage of the purchase price in cash. In countries where stock purchases are usually partially prefinanced by banks – in the U.S., approximately twenty percent – the demand for securities as a whole and for individual securities can be influenced in this way by setting different rates. – However, whether and to what extent an increase/decrease in minimum initial margin rates can avoid equity bubbles is debatable. – See payoff period, equity bubble, reverse stock purchase, bubble, speculative, boom-bust cycle, stock market fever, credit stocks, margin, minimum rates, installment purchase.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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