The Allocation of Credit and Financial Collapse

N. Gregory Mankiw

The Quarterly Journal of Economics, 1986, vol. 101, issue 3, 455-470

Abstract: This paper examines the allocation of credit in a market in which borrowers have greater information concerning their own riskiness than do lenders. It illustrates that (1) the allocation of credit is inefficient and at times can be improved by government intervention, and (2) small changes in the exogenous risk-free interest rate can cause large (discontinuous) changes in the allocation of credit and the efficiency of the market equilibrium. These conclusions suggests a role for government as the lender of last resort.

Date: 1986
References: Add references at CitEc
Citations: View citations in EconPapers (188)

Downloads: (external link)
http://hdl.handle.net/10.2307/1885692 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Allocation of Credit and Financial Collapse (1986)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:101:y:1986:i:3:p:455-470.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().