Saving eliminates credit rationing
de Meza, D.
& Webb, D. C.
(2001).
Saving eliminates credit rationing.
(Financial Markets Group Discussion Papers 391).
Financial Markets Group, The London School of Economics and Political Science.
& Webb, D. C.
(2001).
Saving eliminates credit rationing.
(Financial Markets Group Discussion Papers 391).
Financial Markets Group, The London School of Economics and Political Science.
Equilibrium credit rationing, in the sense of Stiglitz and Weiss (1981), implies the borrower faces an infinite marginal cost of funds. Infinitessimily delaying the project to accumulate more wealth is therefore advantageous to the borrower. As a result, the well-known conditions for credit rationing cannot be satisfied.