Credit rationing by definition is limiting the lenders of the supply of additional credit to borrowers who demand funds at a set quoted rate by the financial institution.[1] It is an example of market failure, as the price mechanism fails to bring about equilibrium in the market. It should not be confused with cases where credit is simply "too expensive" for some borrowers, that is, situations where the interest rate is deemed too high. With credit rationing, the borrower would like to acquire the funds at the current rates, and the imperfection is the absence of supply from the financial institutions, despite willing borrowers. In other words, at the prevailing market interest rate, demand exceeds supply, but lenders are willing neither to lend enough additional funds to satisfy demand, nor to raise the interest rate they charge borrowers because they are already maximising profits, or are using a cautious approach to continuing to meet their capital reserve requirements.[2]
^Jaffee, Dwight M. (1989), Eatwell, John; Milgate, Murray; Newman, Peter (eds.), "Credit Rationing", Money, London: Palgrave Macmillan UK, pp. 103–108, doi:10.1007/978-1-349-19804-7_10, ISBN 978-0-333-49527-8, retrieved 2020-10-27
^Definitions for the whole article are based on class notes by Anton Korinek, University of Maryland.
reserve requirements. Creditrationing is not the same phenomenon as the better-known case of food rationing. Creditrationing is the result of asymmetric...
Rationing is the controlled distribution of scarce resources, goods, services, or an artificial restriction of demand. Rationing controls the size of the...
allowable rate the quantity of credit demanded will exceed the quantity of credit supplied. A more subtle source of creditrationing is that higher interest...
between interest rates and credit availability (i.e. creditrationing occurs). Many times, a credit crunch is accompanied by a flight to quality by lenders...
Another example involves spillovers from credit markets to the goods market. If there is creditrationing, some individuals are constrained in the number...
employer and their workers. Like layoffs in the labor market, there is creditrationing in the financial market. Also, a typical loan contract is just like...
implications for economic growth. For example, in the presence of creditrationing, aggregate risk can cause bank failures and hinder capital accumulation...
academic literature, redlining falls under the broader category of creditrationing. The documented history of redlining in the United States is a manifestation...
showed that a competitive loan market suffers from the creditrationing problem. The creditrationing means that, among borrowers who appear to be identical...
supply during wartime or in other emergency situations when rationing is in force. Ration stamps were widely used during World War II by both sides after...
obtain any credit at the existing market interest rate although they are willingly to pay the market value. Hence, we see creditrationing as a result...
org/stable/1805228 Stiglitz, Joseph E.; Weiss, Andrew (June 1981). "Creditrationing in markets with imperfect information". The American Economic Review...
hypothesis in labor economics. In some ways parallel is the phenomenon of creditrationing, in which banks hold interest rates low to create an excess demand...
public and private sector demand for credit has led — in the context of interest rate controls — to creditrationing to the private sector and the introduction...
Okurut, F. N.; Schoombee, A.; Berg, S. Van Der (2005). "Credit Demand and CreditRationing in the Informal Financial Sector in Uganda1". South African...
69(3), pp. 213–225. Stiglitz, Joseph E. and Andrew Weiss, 1981. "CreditRationing in Markets with Imperfect Information," American Economic Review, 71(3)...
rather than lending to high market-determined rates. The Reichsbank's creditrationing only ended in early 1926, after which the discount rate could be gradually...
The Social Credit Party of Great Britain and Northern Ireland was a political party in the United Kingdom. It grew out of the Kibbo Kift, which was established...
rate, refuse credit to other clients and the market moves. The researcher asks if the story of interest rate caps leading to creditrationing is borne out...
Rieder and Ryland Thomas. 2019. "The Bank of England and central bank creditrationing during the crisis of 1847: frosted glass or raised eyebrows?" Evans...
available credit. In order to supervise the austerity, Prime Minister David Ben-Gurion ordered the establishment of the Ministry of Rationing and Supply...
Carbon rationing, as a means of reducing CO2 emissions to contain climate change, could take any of several forms. One of them, personal carbon trading...
(1 episode, uncredited) Tracy Mann as Holophone voice over (2 episodes, credited in 1) Victoria Eagger as Commodore Sorenson: A leading figure of the Silver...
(including dating above) calculating interest in court judgments or homestead credit determining which of several assets in a divorce are most prized by each...
Global Information