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Credit rationing appears to violate competitive market clearing in the loan market. Two arguments have been used to rationalize credit rationing: (a) Moral hazard; and
Credit rationing appears to violate competitive market clearing in the loan market. Two arguments have been used to rationalize credit rationing: (a) Moral hazard; and (b) Adverse selection. Choose one of these arguments to illustrate why credit rationing can occur. Are they the only reasons for credit rationing? Hint: GTB pages 178-184 and Examples 8.2 and 8.3
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Quantitative Methods for Business
Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
13th edition
1285866312, 978-0357685648, 978-1285866314
