Credit Rationing by Loan Size in Commercial Loan Markets

FRB Richmond Economic Review, Vol. 78, No. 3, May/June 1992, pp. 3-8

6 Pages Posted: 7 Nov 2012

See all articles by Stacey Schreft

Stacey Schreft

Government of the United States of America - Office of Financial Research; Board of Governors of the Federal Reserve System

Anne P. Villamil

University of Illinois at Urbana-Champaign - Department of Economics

Abstract

The authors present a theoretical model in which a profit-maximizing lender may ration credit to businesses by restricting loan size. Such credit rationing occurs despite the absence of differences across borrowers in default risk or loan administration costs. Moreover, the model predicts an interest rate-loan size pattern that matches that observed in U.S. commercial loan markets.

Suggested Citation

Schreft, Stacey L. and Villamil, Anne P., Credit Rationing by Loan Size in Commercial Loan Markets. FRB Richmond Economic Review, Vol. 78, No. 3, May/June 1992, pp. 3-8, Available at SSRN: https://ssrn.com/abstract=2125124

Stacey L. Schreft (Contact Author)

Government of the United States of America - Office of Financial Research ( email )

717 14th Street, NW
Washington DC, DC 20005
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Board of Governors of the Federal Reserve System ( email )

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Anne P. Villamil

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
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Urbana, IL 61801
United States
217-244-6330 (Phone)

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