Uncertainty, market power and credit rationing

Paul Ramskogler

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

Abstract: This paper explores the nexus between uncertainty and credit restrictions. A Post Keynesian approach to an explanation of access rationing to credit is developed and contrasted with the dominant relationship lending school. It is argued that access rationing to credit has be understood in terms of uncertainty and power. Differences in systemic uncertainty to which hetrogenous market participants are exposed can explain the reluctance of banks to lend to certain applicants. Monopsonistic power and uncertainty further help to understand why banks of a different size show differences in their lending behavior.

JEL-codes: D81 D89 E12 E51 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-mac
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Working Paper: Uncertainty, market power and credit rationing (2007)
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