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

Author

Listed:
  • Guido Fioretti

    (University of Bologna)

Abstract

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.

Suggested Citation

  • Guido Fioretti, 2005. "Credit Rationing and Internal Ratings in the face of Innovation and Uncertainty," Finance 0504021, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpfi:0504021
    Note: Type of Document - pdf; pages: 22. Submitted to 'Economic Notes'
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/fin/papers/0504/0504021.pdf
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    References listed on IDEAS

    as
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    Keywords

    Credit rationing; High-Tech Firms; Internal Rating Systems; Basel II;

    JEL classification:

    • G - Financial Economics

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