Advanced Search
MyIDEAS: Login to save this article or follow this journal

Credit Rationing: Something's Gotta Give

Contents:

Author Info

  • DAVID DE MEZA
  • DAVID C. WEBB

Abstract

Equilibrium credit rationing, in the sense of Stiglitz and Weiss, is shown to imply that the marginal cost of funds to the borrower is infinite. So entrepreneurs have an overwhelming incentive to cut their loans by a dollar and so avoid rationing. Ways of doing this include scaling down the project, decreasing consumption, or delaying the project to accumulate more savings. Credit rationing emerges for indivisible projects only when delay causes sufficient deterioration. Borrowers then apply for funds at the first opportunity, but, counterfactually, once denied a loan, they never reapply. Conditions for credit rationing are stringent indeed. Copyright (c) The London School of Economics and Political Science 2006.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0335.2006.00533.x
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 73 (2006)
Issue (Month): 292 (November)
Pages: 563-578

as in new window
Handle: RePEc:bla:econom:v:73:y:2006:i:292:p:563-578

Contact details of provider:
Postal: Houghton Street, London WC2A 2AE
Phone: +44 (020) 7405 7686
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0013-0427
More information through EDIRC

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0013-0427

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Drakos, Konstantinos & Giannakopoulos, Nicholas, 2011. "On the determinants of credit rationing: Firm-level evidence from transition countries," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1773-1790.
  2. Kjenstad, Einar & Su, Xunhua, 2012. "Credit rationing by loan size: a synthesized model," MPRA Paper 44113, University Library of Munich, Germany.
  3. Giuseppe Coco & Giuseppe Pignataro, 2010. "Inequality of Opportunity in the Credit Market," series 0026, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Jan 2010.
  4. Arnold, Lutz G. & Reeder, Johannes & Trepl , Stefanie, 2010. "Single-Name Credit Risk, Portfolio Risk, and Credit Rationing," University of Regensburg Working Papers in Business, Economics and Management Information Systems 448, University of Regensburg, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bla:econom:v:73:y:2006:i:292:p:563-578. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.