search query: @indexterm Credit markets / total: 99
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| Author: | Schmidt-Mohr, U. |
| Title: | Rationing versus collateralization in competitive and monopolistic credit markets with asymmetric information |
| Journal: | European Economic Review
1997 : JUL, VOL. 41:7, p. 1321-1342 |
| Index terms: | CREDIT MARKETS LOANS CREDIT RATIONING INFORMATION |
| Language: | eng |
| Abstract: | In the paper, the structure of loan contracts comprising interest rate, loan size and collateral requirements in monopolistic and competitive credit markets is analyzed. It is argued that results obtained in the literature so far are mainly driven by assuming technological indivisibilities or universal risk neutrality or both. Whatever market structure is assumed to prevail, the generalized model implies that some borrowers always receive a smaller loan and invest at a smaller scale than with perfect information. In the competitive case, loan size rationing and self-selection of risks are shown to co-exist in equilibrium, even though full funding of all investment projects is feasible and socially desirable. |
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