de Meza, David and Webb, David C. (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. |
| Library of Congress subject classification: | H Social Sciences > HG Finance |
| Sets: | Research centres and groups > Managerial Economics and Strategy Group Departments > Finance Departments > Management Research centres and groups > Financial Markets Group (FMG) |
| Date Deposited: | 06 May 2011 11:29 |
| URL: | http://eprints.lse.ac.uk/35750/ |
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