Equitable Redistribution and Inefficiency under Credit Rationing

Beladi Hamid (), Marjit Sugata, Mishra Suryaprakash and Oladi Reza
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Beladi Hamid: University of Texas at San Antonio, San Antonio, USA
Marjit Sugata: Hong Kong Polytechnic University, Hong Kong, China
Mishra Suryaprakash: National Law School of India University, Bengaluru, India
Oladi Reza: Utah State University, Logan, USA

The B.E. Journal of Economic Analysis & Policy, 2025, vol. 25, issue 3, 731-743

Abstract: It has been argued in many policy circles that lack of access to credit by the poor may be a source of inefficiency in developing economies. Then, conventional wisdom may suggest that asset redistribution from the rich to the poor improves efficiency. In contrast, we develop a general equilibrium model with credit market and show that such an egalitarian redistribution of assets may indeed lead to inefficiency.

Keywords: inequality; credit rationing; egalitarian redistribution (search for similar items in EconPapers)
JEL-codes: D63 H21 O15 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejeap-2024-0332

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