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dc.contributor.authorSu, Xunhua
dc.date.accessioned2019-10-26T22:16:41Z
dc.date.available2019-10-26T22:16:41Z
dc.date.created2018-01-15 00:13
dc.date.issued2010-11-15
dc.identifieroai:brage.bibsys.no:11250/163995
dc.identifierurn:issn:1500-4066
dc.identifierhttp://hdl.handle.net/11250/163995
dc.identifier.urihttp://hdl.handle.net/20.500.12424/1958994
dc.description.abstractTo explain the widely observed phenomenon of credit rationing, Stiglitz and Weiss
 (1981) propose a theory of random rationing under imperfect information. With a
 simple model plausibly expanding the Stiglitz and Weiss setting, we argue that, random
 rationing occurs only in some extreme cases and hence is not likely to be a prevalent
 phenomenon. We start by illustrating that the Stiglitz and Weiss (1981) model and
 hence random rationing are quite sensitive to the assumption of the ranking of projects.
 Given that the ranking is according to the Mean-preserving Spread, there is adverse
 selection but no moral hazard. In the absence of moral hazard, random rationing is
 almost impossible to occur. Then by presuming the coexistence of adverse selection
 and moral hazard, we derive two required conditions for the occurrence of random
 rationing. First, random rationing occurs only if collateral has an overall deadweight
 cost other than the negative adverse selection effect. As collateral is a widely observed
 debt feature in practice, such an overall deadweight cost should not be the case for
 the majority of borrowers. Second, the occurrence of random rationing entails that
 the potential negative effects of the loan rate, collateral, loan size and any restrictive debt covenant simultaneously overweigh their positive effects exactly at the current
 contracting level. In this case, the zero-profit curve of the lender degenerates to a
 single point and borrowers face a take-it-or-leave-it offer. We conjecture that such a
 required condition leaves little space for the significance of random rationing.
dc.language.isoeng
dc.publisherNorwegian School of Economics and Business Administration. Department of Finance and Management Science
dc.relation.ispartofDiscussion paper
dc.relation.ispartof2010:14
dc.subjectVDP::Samfunnsvitenskap: 200::Økonomi: 210::Bedriftsøkonomi: 213
dc.titleA re-examination of credit rationing in the Stiglitz and Weiss model
dc.typeWorking paper
ge.collectioncodeOAIDATA
ge.dataimportlabelOAI metadata object
ge.identifier.legacyglobethics:12428321
ge.identifier.permalinkhttps://www.globethics.net/gel/12428321
ge.lastmodificationdate2018-01-15 00:13
ge.lastmodificationuseradmin@pointsoftware.ch (import)
ge.submissions0
ge.oai.exportid148650
ge.oai.repositoryid98972
ge.oai.setnameDepartment of Business and Management Science
ge.oai.setnameNorges Handelshøyskole
ge.oai.setnameDiscussion papers (FOR)
ge.oai.setspeccom_11250_163542
ge.oai.setspeccom_11250_92962
ge.oai.setspeccol_11250_163560
ge.oai.streamid2
ge.setnameGlobeEthicsLib
ge.setspecglobeethicslib
ge.linkhttp://hdl.handle.net/11250/163995


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