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Credit Rationing and Internal Ratings in the face of Innovation and Uncertainty

  • Guido Fioretti

    (University of Bologna)

Some empirical investigations are pointing to the fact that high-tech firms are subject to credit rationing to a higher extent than the average. This excess of credit rationing may not be due to information asymmetries, but rather to the inability of credit institutions to screen projects in novel fields. This article provides a model of this phenomenon and explores its implications in the light of recent changes in the screening procedures of major banks. In particular, the changes to be made in order to comply with the ``Basel II'' accord emphasize the impact of screening procedures on credit rationing.

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File URL: http://econwpa.repec.org/eps/fin/papers/0504/0504021.pdf
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Paper provided by EconWPA in its series Finance with number 0504021.

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Length: 22 pages
Date of creation: 28 Apr 2005
Date of revision:
Handle: RePEc:wpa:wuwpfi:0504021
Note: Type of Document - pdf; pages: 22. Submitted to 'Economic Notes'
Contact details of provider: Web page: http://econwpa.repec.org

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