Economically Reasonable Interest Rate on Debt Obligation sin the Course of Economic Activity

Abstract

This paper is devoted to the issues of determining the upper and lower limits of an economically reasonable interest rate on debt obligations. The purpose of the study is to determine the boundaries of an economically reasonable interest rate on debt obligations, taking into account the main conditions of the loan relations: security, urgency, frequency of payments, availability (absence) measures of state support, etc. In the course of the study, such methods as content analysis of sources, regulatory regulation, and market analysis were used. The study is based on the analysis of the norms of the relationship between economic entities, taking into account the conditions for implementation of state support in socially significant areas of economic relations. In order to study the pay ability of debt obligations, the author analyzed the rules of tax legislation. It examined legal acts which revealed the facts of the use of terms of relationships other than those applied in the open market. Identified reasons for the existence of conditions of credit and borrowing relations, other than economically reasonable: interaction of affiliates, bonded terms of the transaction. The author discloses the concept of an “economically reasonable interest rate on debt obligations”, which arose as a result of the inadmissibility (taking into account the rules of regulatory legal acts and established judicial practice) of the use of the term “market value” in relation to loan relations. The results demonstrated that the values of interest rates on debt obligations have an economically reasonable linkage (through the specified multiples of the key rate values). From the point of view of the interest rate on loan obligations, debt obligations are divided into corresponding magnified groups (debt obligations between affiliates; preferential debt liabilities; debts taking into account the degree of risk of the borrower and the security of borrowing resources). The author makes a conclusion about the revealed fundamental patterns in relation to economically reasonable interest rates on debt obligations, taking into account contractual terms between economic entities.

Keywords

• debt obligations
• credit and loan relations
• key rate
• refinancing rate
• interest rate
• market relations
• appraisal activity
• forensic examination
• bankruptcy
• tax control
• affiliated entities