# Loan commitment, fixed-term loan commitment

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- Post ID: 591646
- Modified: 2023-07-25T21:02:15+00:00
- Language: en

## Definition

A bank grants a customer a facility under contractually agreed terms. A long period of time may elapse before the facility is drawn down, i.e. the loan is called. Typically, therefore, the bank reserves the right not to disburse the loan if there is a discernible deterioration in the customer's creditworthiness by the time the funds are drawn down. - In the case of fixed-interest loans, the bank incurs a maturity risk as a result of the period of suspension between conclusion of the contract and disbursement. This is because it cannot pass on any increase in interest rates that may have occurred in the meantime. This interest rate risk must be offset by appropriate provisions (provisions for contingent losses, interest rate swap). - See hedge, asset-liability committee, commitment fee, cash flow hedge, contingent swap, credit quality, term loan, loan commitment, irrevocable, term premium, non-acceptance indemnity, fixed interest rate, interest rate option, interest rate swap. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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