What lies behind credit rationing? A survey of the literature

Annie Bellier, Wafa Sayeh and Stéphanie Serve

No 2012-39, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Since World War II, the concept of credit rationing (CR) has been a topic of extensive investigations, both theoretical and empirical. From the theoretical point of view, several attempts have been made to define the extent to which a firm can be identified as credit rationed in macroeconomic and microeconomic financial frameworks. In the context of the current financial crisis, CR is strategically important given the financial difficulties faced by small business firms. The first purpose of this article is to provide an historical context for the theoretical frameworks of CR to analyze the existing definitions and typologies. From an empirical point of view, the main obstacle is that a direct measure of CR is not directly observable, considering that the answer is given by the firm and/or the bank. In light of the previously defined typology, the second purpose of this article is to present both the measures of CR and the main driving factors that have been tested in the empirical literature. Special attention is paid to the supply-demand interaction via the impact of the bank relationship on CR.

Keywords: credit rationing; small business; bank relationship (search for similar items in EconPapers)
JEL-codes: G14 G21 G32 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ban and nep-his
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Citations: View citations in EconPapers (12)

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