Being Credit Rationed: Delay and Transaction Cost

Rajlakshmi Mallik ()
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Rajlakshmi Mallik: Centre National de la Recherche Scientifique (CNRS), A/2/5 Pearl Apartment, 50 B Kailash Bose Street, Kolkata 7000 006, West Bengal, India

International Game Theory Review (IGTR), 2015, vol. 17, issue 02, 1-28

Abstract: This paper develops alternative models explaining why households with credit need to finance their projects (enterprises) avoid formal credit. More importantly it argues that the problem of avoidance of formal credit and ensuring credit access is not necessarily restricted to the small borrower or borrowers with inefficient projects. Delay cost and personal loan transaction cost may also cause highly productive projects or larger projects shying away from formal credit in spite of low interest rates. Some of the policy implications of the above findings are also discussed.

Keywords: Credit rationing; participation; access; delay cost; personal transaction cost; informal loan; formal loan (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1142/S0219198915400204

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