Credit rationing when banks are funding constrained

Itai Agur

The North American Journal of Economics and Finance, 2012, vol. 23, issue 2, 220-227

Abstract: Credit crunches, such as in the recent financial crisis, generally occur when banks are themselves funding constrained. We use this observation to repair the workhorse Stiglitz–Weiss model of credit rationing. Recent research has invalidated the distributional assumption on which that model is based. This paper shows that by adding the assumption that banks are capacity constrained, Stiglitz–Weiss rationing can occur again. It discusses how this finding can be related to the current policy debates on bank funding and credit provision.

Keywords: Credit rationing; Bank competition; Market structure; Bank funding (search for similar items in EconPapers)
JEL-codes: D82 G21 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:23:y:2012:i:2:p:220-227

DOI: 10.1016/j.najef.2012.01.002

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