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| Author: | Lensink, R. Sterken, E. |
| Title: | The option to wait to invest and equilibrium credit rationing |
| Journal: | Journal of Money, Credit and Banking
2002 : FEB, VOL. 34:1, p. 221-225 |
| Index terms: | CREDIT RATIONING INTEREST RATES INVESTMENT RISK |
| Language: | eng |
| Abstract: | Stiglitz and Weiss (1981) show that firms considering risky projects have higher reservation interest rates and hence it is optimal for a bank to reduce loan supply. In this note the authors show that when the risk involved in an investment will be resolved in the future, investors with riskier projects have a greater return from waiting. |
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