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Credit rationing by loan size in commercial loan markets


  • Stacey L. Schreft
  • Anne P. Villamil


The authors present a theoretical model in which a profit-maximizing lender may ration credit to businesses by restricting loan size. Such credit rationing occurs despite the absence of differences across borrowers in default risk or loan administration costs. Moreover, the model predicts an interest rate-loan size pattern that matches that observed in U.S. commercial loan markets.

Suggested Citation

  • Stacey L. Schreft & Anne P. Villamil, 1992. "Credit rationing by loan size in commercial loan markets," Economic Review, Federal Reserve Bank of Richmond, issue May, pages 3-8.
  • Handle: RePEc:fip:fedrer:y:1992:i:may:p:3-8:n:v.78no.3

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    References listed on IDEAS

    1. 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.
    2. Villamil, Anne P., 1988. "Price discriminating monetary policy : A nonuniform pricing approach," Journal of Public Economics, Elsevier, vol. 35(3), pages 385-392, April.
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    Cited by:

    1. Kjenstad, Einar & Su, Xunhua, 2012. "Credit rationing by loan size: a synthesized model," MPRA Paper 44113, University Library of Munich, Germany.
    2. Perez, Stephen J., 1998. "Testing for Credit Rationing: An Application of Disequilibrium Econometrics," Journal of Macroeconomics, Elsevier, vol. 20(4), pages 721-739, October.
    3. Kjenstad, Einar C. & Su, Xunhua & Zhang, Li, 2015. "Credit rationing by loan size: A synthesized model," The Quarterly Review of Economics and Finance, Elsevier, vol. 55(C), pages 20-27.

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    Credit ; Bank loans;


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