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Saving eliminates credit rationing

de Meza, David and Webb, David C. (2001) Saving eliminates credit rationing. Financial Markets Group Discussion Papers (391). Financial Markets Group, The London School of Economics and Political Science, London, UK. (Submitted)

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Equilibrium credit rationing, in the sense of Stiglitz and Weiss (1981), implies the borrower faces an infinite marginal cost of funds. Infinitessimily delaying the project to accumulate more wealth is therefore advantageous to the borrower. As a result, the well-known conditions for credit rationing cannot be satisfied.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2001 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
JEL classification: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
Date Deposited: 28 Aug 2009 16:08
Last Modified: 15 Sep 2023 22:50

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