A credit rationing model of the medium risk borrowers with low valued collateral

Sehoon Kwon

Applied Economics Letters, 2022, vol. 29, issue 21, 1970-1974

Abstract: This paper investigates how the risk and the collateral values are jointly affecting the credit rationing. We propose a credit rationing model of continuous default risk and collateral values and show that the medium risk borrowers with low valued (or high transaction cost) collateral are most vulnerable to the credit rationing.

Date: 2022
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DOI: 10.1080/13504851.2021.1967271

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