de Meza, David 
ORCID: 0000-0002-5638-8310 and Webb, David C. ORCID: 0009-0005-5611-7253
(1992)
Efficent credit rationing.
European Economic Review, 36 (6).
pp. 1277-1290.
ISSN 0014-2921
Abstract
This paper shows that credit rationing is endemic to competitive capital markets in which information is symmetrically distributed. Equilibrium contracts may restrict loans to a size well below that at which backruptcy is a threat. The model predicts that credit rationing will be most severe on projects of intermediate risk and decreases the more costly it is for creditors to recover bad debts. However, there is no case for government intervention, despite the usual identification of credit rationing as a per se capital market imperfection.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.elsevier.com/wps/find/journaldescriptio... |
| Additional Information: | © 1992 Elsevier Science Publishing B.V. |
| Divisions: | Finance Management Financial Markets Group |
| Subjects: | H Social Sciences > HG Finance |
| Date Deposited: | 06 May 2011 11:29 |
| Last Modified: | 01 Nov 2024 05:11 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35750 |
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