Conclusions and Implications
Non-price rationing has been viewed as having a number of causes. Early theory viewed rationing as inconsistent with a traditional competitive equilibrium and focused its attention on regulatory, monopolistic, or institutional constraints which might evoke such a reaction by suppliers. Later theory, armed with new information-based equilibria, looked to adverse selection and moral hazard as the perpetrator of rationing. The present model looks in a slightly different direction. Rationing is indeed an informational phenomenon. However, rather than viewing the lender as a quasi passive reactor in the market, the present model allows for a mechanism whereby information is synthesized. Rationing results as a by-product of this synthesization of information.
KeywordsInterest Rate Monetary Policy Moral Hazard Credit Rationing Adverse Selection
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