The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Credit Rationing

  • Charles W. Calomiris
  • Stanley D. Longhofer
  • Dwight M. Jaffee
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_479

Abstract

Credit rationing – a situation in which lenders are unwilling to advance additional funds to borrowers at the prevailing market interest rate – is now widely recognized as a problem arising because of information and control limitations in financial markets. This article reviews various motivations behind research on credit rationing, traces the history of theoretical efforts to explain how this phenomenon can persist in equilibrium, and reviews recent empirical research on its prevalence and effects. In the process, credit rationing is shown to be simply an extreme case of the more general problem of capital market misallocation.

Keywords

Adverse selection Asset substitution Asymmetric information Availability doctrine Banking crises Bankruptcy Capital market misallocation Credit market discrimination Credit markets in developing countries Credit rationing Efficient allocation Financial intermediaries Financial repression Information economics Interest rate controls Limited liability Liquidity shocks Monetary policy transmission Moral hazard Rational expectations Separating contracts Usury 

JEL Classifications

D8 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Charles W. Calomiris
    • 1
  • Stanley D. Longhofer
    • 1
  • Dwight M. Jaffee
    • 1
  1. 1.