Rationing despite screening: A motif based on price-discrimination
نویسنده
چکیده
The paper revisits Stiglitz and Weiss (1981)’ seminal Credit Rationing result in more detail. It has often been argued that rationing is irrelevant since a) it only pertains to specific assumptions about the quality of investment projects and b) it is eliminated by offering screening contracts to borrowers. The paper argues the opposite. It shows that Credit Rationing holds for a wide range of assumptions about the quality of investment projects and it explains that if a bank has market power then screening contracts may not only fail to eliminate rationing they may even create it.
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