London Interbank Offered Rate
The average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks.
Many financial institutions, mortgage lenders, and credit card agencies set their own rates relative to it.
The Libor Scandal arose when it was discovered that banks were falsely inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were.
Scope:
- Standard Interbank Products
- Commercial Field Products
- Hybrid Products
Economists Do It With Models: "What is Libor?"
New York Times: Libor Scandal
