Optimal Credit Rationing in Not-For-Profit Financial Institutions
David Canning (),
Clifford W. Jefferson and
John E. Spencer
Additional contact information
Clifford W. Jefferson: Queen's University of Belfast, Northern Ireland, U.K.
John E. Spencer: Queen's University of Belfast, Northern Ireland, U.K.
International Economic Review, 2003, vol. 44, issue 1, 243-261
We examine the dynamic optimization problem for not-for-profit financial institutions (NFPs) that maximize consumer surplus, not profits. We characterize the optimal dynamic policy and find that it involves credit rationing. Interest rates set by mature NFPs will typically be more favorable to customers than market rates, as any surplus is distributed in the form of interest rate subsidies, with credit rationing being required to prevent these subsidies from distorting loan volumes from their optimal levels. Rationing overcomes a fundamental problem in NFPs; it allows them to distribute the surplus without distorting the volume of activity from the efficient level. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association
References: Add references at CitEc
Citations View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
http://openurl.ingenta.com/content?genre=article&i ... &volume=44&spage=243 (application/pdf)
Free access to full text is restricted to Ingenta subscribers.
Working Paper: Optimal Credit Rationing in Not-For-Profit Financial Institutions (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:44:y:2003:i:1:p:243-261
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598
Access Statistics for this article
International Economic Review is currently edited by Harold L. Cole
More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Series data maintained by Wiley-Blackwell Digital Licensing ().