Adverse selection, endogenous borrowing constraints and firm growth

Arthur Fishman and Miriam Krausz

Economics Letters, 2010, vol. 108, issue 2, 219-221

Abstract: If banks face asymmetric information about loan quality, endogenous borrowing constraints which restrict the size of new firms may emerge in equilibrium. High quality firms reduce financing costs by starting off small and increasing their size over time.

Keywords: Endogenous; borrowing; constraints; Firm; growth; Asymmetric; information (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:108:y:2010:i:2:p:219-221

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