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Measuring Credit Rationing In Rural Financial Markets: A Portuguese Case Study

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  • Aguilera, Nelson A.
  • Graham, Douglas H.

Abstract

This paper analyzes an appropriate methodology for studying discriminatory credit rationing in rural credit programs with fixed interest rates. The paper demonstrates that in order to analyze credit discrimination one should have a well-defined loan demand and supply model. The criteria by which loan applications are accepted or rejected should be explicitly incorporated into the analysis. The paper also de_monstrates that the estimation of the model should consider not only data on loans granted but also on loans rejected. Finally, the empirical analysis implemented in this study shows that this loan demand and supply model is quite adequate for analyzing the discriminatory polkie'> followed for a rural credit program in Portugal after the 1974 Revolution.

Suggested Citation

  • Aguilera, Nelson A. & Graham, Douglas H., 1990. "Measuring Credit Rationing In Rural Financial Markets: A Portuguese Case Study," 1990 Annual meeting, August 5-8, Vancouver, Canada 270732, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea90:270732
    DOI: 10.22004/ag.econ.270732
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    References listed on IDEAS

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    1. Jaffee, Dwight M & Modigliani, Franco, 1969. "A Theory and Test of Credit Rationing," American Economic Review, American Economic Association, vol. 59(5), pages 850-872, December.
    2. Baltensperger, Ernst, 1978. "Credit Rationing: Issues and Questions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(2), pages 170-183, May.
    3. Donald R. Hodgman, 1960. "Credit Risk and Credit Rationing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 74(2), pages 258-278.
    4. Nelson, Forrest D., 1977. "Censored regression models with unobserved, stochastic censoring thresholds," Journal of Econometrics, Elsevier, vol. 6(3), pages 309-327, November.
    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
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