Financial constraints and unemployment equilibrium

The aim of this paper is to show that a robust determination of unemployment equilibria can be based on the integration of credit rationing into a general equilibrium model. We first review some of the Keynesian macroeconomic models. We show that the problems bequeathed by Keynes’ legacy are only partially solved by the strand of the new Keynesian economics based on market imperfections and endogenous rigidities. In order to overcome these problems we refer to credit rationing. In particular, we build a simple general equilibrium model in which prices are–in principle–perfectly flexible and credit rationing implies unemployment equilibria.     

Credit rationing and capital accumulation with investment and consumption loans revisited

A simple model is developed to evaluate the roles of credit rationing and government policies of financial repression in the process of capital accumulation. In the model, credit rationing on both investment and consumption loans decreases as capital accumulates but increases as the government imposes policies of financial repression to a greater extent. While a reduction in credit rationing on consumption loans impedes capital accumulation, such a reduction on investment loans facilitates it. We find that developing countries may be trapped at a low-capital-stock steady state while developed countries converge to a high-capital-stock steady state. Instead of adopting policies of financial liberalization, interestingly, this paper finds that policies of financial repression may enable developing countries to escape the development trap.     

Credit rationing or overlending? An exploration into financing imperfection

Small and new firms are deemed to be unable to obtain sufficient bank loans. This idea finds a strong theoretical support in credit rationing theory. However, this is vigorously challenged by De Meza and Webb (1987, 2000) suggesting that firms can benefit from an excess of credit, i.e. overlending. Credit rationing or overlending? The contribution of this empirical article is twofold: to our knowledge, it is the first to make an attempt in measuring the relative importance of these two types of financing imperfection and to explore factors leading to one or the other. We exploit a rich panel data set on the access to bank credit for new French businesses during the mid-1990s. Our results show that credit rationing was not highly spread among French new firms. The story told by De Meza and Webb (1987) appears to be a much more realistic model. In addition, we identify factors, linked to the starter, the project or the industry, that are closely associated with credit rationing and/or overlending. Most factors enter into a consistent relation: when they are positively (negatively) associated with credit rationing, they are negatively (positively) associated with overlending.     

Credit rationing, interest rates and capital accumulation

A simple endogenous growth model is developed to characterize credit rationing through the capital accumulation process. The model shows that credit rationing on investment loans decreases as capital accumulates and the enforcement cost decreases. We find that the evolution of the interest rate factor (lending interest rate/depositing interest rate) has a similar pattern to the credit rationing probability. However, simulations show that the evolution of the interest rate spread through the capital accumulation process depends on the degree of the enforcement cost. In the empirical part of the paper, we consider fifty-two countries, at different stages of development, over the period 1995–2005. We confirm the theoretical findings relative to the evolution of the interest rate spread and interest rate factor with capital accumulation. These results suggest that, for economies endowed with costly contract enforcement, the interest rate factor could be a better proxy of credit rationing than the interest rate spread.     

商业银行信贷配给对中国房地产业波动的影响*

商业银行信贷配给控制中国房地产业信贷规模和结构,造成供给和需求的规模与结构扭曲,影响货币政策和财政政策的调控效果,容易引起房地产业波动。本文通过构建信贷配给模型,测算不同波动时期当中,商业银行信贷配给程度的变化趋势,以及对房地产业的影响。实证结果显示,信贷配给程度的变化与房地产业波动显著相关,信贷配给改变了投资和消费在推动房地产产出过程中的结构,并制约路径依赖对产出的影响,同时影响财政政策和数量型货币政策稳定房地产业的效果。本文认为,可以通过逐渐弱化商业银行在房地产金融市场中的垄断地位,丰富房地产信贷供给层次和结构,以及加强信贷供给监督来缓解信贷配给的消极作用。     

Bank structure, capital accumulation and growth: a simple macroeconomic model

Summary. This paper analyzes the equilibrium growth paths of two economies that are identical in all respects, except for the organization of their financial systems: in particular, one has a competitive banking system and the other has a monopolistic banking system. In addition, the sources of inefficiencies, as a result of monopoly banking, and their relationship to the existence of credit rationing are explored. Monopoly in banking tends to depress the equilibrium law of motion for the capital stock for either of two reasons. When credit rationing exists, monopoly banks ration credit more heavily than competitive banks. When credit is not rationed, the existence of monopoly banking leads to excessive monitoring of credit financed investment. Both of these have adverse consequences for capital accumulation. In addition, monopoly banking is more likely to lead to credit rationing than is competitive banking. Finally, the scope for development trap phenomena to arise is considered under both a competitive and a monopolistic banking system. Received: September 20, 1999; revised version: December 3, 1999     

The equilibrium allocation of investment capital in the presence of adverse selection and costly state verification

Summary We consider credit rationing in an environment with adverse selection and costly state verification. The presence of costly state verification permits debt contracts to emerge under conditions that we specify. When debt contracts are observed, so is credit rationing. This rationing occurs even if it is possible for rationed borrowers to bid up expected returns to lenders and hence is voluntary. We also show how the adverse selection and costly state verification problems interact and investigate how improvements in information gathering technology impact on the extent of credit rationing.The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. We have benefitted from comments on an earlier draft of this paper by Franklin Allen, Charlie Calomiris, V. V. Chari, Ed Green, Craig Holden, Jeff Lacker, George Pennachi, Neil Wallace, Anne Villamil, and an anonymous referee and from discussions with Edward Prescott.     

Do Banks Ration Credit to New Enterprises? And Should Governments Intervene?

Do banks deny credit to new start–ups? The presumption that they do has motivated government intervention in several forms, including publicly backed loan guarantee schemes in the UK and elsewhere. This paper presents an overview of the modern theory and evidence of credit rationing, and concludes that the case for credit rationing is weak. Ultimately, theoretical arguments for or against credit rationing are inconclusive, so evidence is needed to decide the issue. The evidence is not supportive of the view that credit rationing is an important or widespread phenomenon.     

Industry equilibrium with outside financing and moral hazard: Implications for market integration

In this paper, we study industry equilibrium under the assumptions that (1) firms need outside financing and (2) they have a moral hazard problem in taking potentially excessive risks. We characterize an industry equilibrium with credit rationing, where firms choose not to take risks, and compare this to the industry equilibrium in the absence of credit rationing. In both cases, we show that competition increases and prices decline as markets integrate. However, in markets with credit rationing there is typically more exit, a smaller decline in prices and, most strikingly, the market value of the industry increases rather than decreases.     

A Critique of Kirzner's Finders-Keepers Defense of Profit

This paper criticizes Kirzner's use of the finders-keepers ethic to justify entrepreneurial profit. It does so by pursuing two lines of argumentation. First, Kirzner's defense of the justice of entrepreneurial profit is based upon treating the wage-for-labor-time exchange as legitimate. There are good reasons for doubting the justice of the wage-labor exchange. The paper argues that the profits earned by a capitalist firm employing wage-labor can not be considered to be just if we accept the juridical principle of imputation. The juridical principle of imputation asserts that people should be held legally responsible for the actions and results of the actions for which they are factually responsible. If we consider hired human beings always to be responsible agents, as is true in David Ellerman's (1992) rendition of the labor theory of property, Kirzner's defense of entrepreneurial profit generated in a capitalist enterprise is weakened. Second, the paper criticizes Kirzner's thesis that in a market economy everyone has, in principle, an equal opportunity to be an entrepreneur directing a productive enterprise or to be an entrepreneur engaging in speculation. Kirzner reaches this conclusion because he believes that credit markets in a free economy do not systematically discriminate amongst types of borrowers. This conclusion has been called into question by credit rationing models demonstrating that asset-poor individuals can be systematically denied access to loans. The credit rationing literature erodes the underpinnings of Kirzner's application of the finders-keepers ethic to the evaluation of entrepreneurial profit earned through speculation or productive creativity because it implies that all individuals do not in principle have an equal opportunity to be an entrepreneur.     

Credit mismatch and breakdown

This paper studies the phenomenon of mismatch in a decentralized credit market where borrowers and lenders must engage in costly search to establish credit relationships. Our dynamic general equilibrium framework integrates incentive based informational frictions with a matching process highlighted by (i) borrowers' endogenous market entry and exit decision (entry frictions) and (ii) time and resource costs necessary to locate credit opportunities (search frictions). A key feature of the incentive compatible loan contract negotiated between borrowers and lenders is the interaction of informational frictions (in the form of moral hazard) with entry and search frictions. We find that the removal of entry barriers can eliminate incentive-based equilibrium credit rationing. More generally, entry and incentive frictions are important in understanding the extent of credit rationing and credit mismatch, while search and incentive frictions are important for understanding credit market breakdown.     

小企业融资理论及实证研究综述

本综述主要围绕小企业融资需求、信贷配给及宏观经济政策冲击三方面的内容展开。严重的信息不对称以及所有者个人与企业的高度融合决定了小企业融资需求与传统理论之间存在着相当的差距 ,信贷配给问题在小企业当中表现突出。但也有观点认为 ,引入决定企业存活的真正因素———人力资本之后 ,新建企业并不存在信贷配给 ,这为相关政策的制定开启了新的思路。最后 ,由于小企业受宏观政策变化的影响较大 ,也需要引起有关部门的足够重视 ,以达到不同规模企业协调发展的目的     

The Significance of Credit Rationing on Real Investment Activity – A Test for the Significance of Capital-Market Imperfection in Japan

Does bank credit matter to the real investment finance of firms? If so, to what kind of firms does it matter, and why? Despite the progress of research in this field, there is still little empirical consensus on these problems. This paper contributes to the understanding of capital-market imperfection in Japan by answering these questions. I introduce new methods to test the significance of credit rationing and show that bank credit is indeed a very important determinant of real investment activity of small firms. The availability of long-term loans has particularly significant effects on the investment opportunities of small firms, although large firms with capital of more than 1 billion yen are free from credit rationing. JEL Classification Numbers: C51, E44, G21.     

The impact of credit rationing on the real sector: a study of the effect of mortgage rates and terms on housing starts

Various studies of the impact of credit rationing on the housing sector have examined its effect on mortgage terms and flows. If credit rationing has a significant effect on the economy, it must affect the real sector, i.e. housing starts. This paper examines the causal relationships between six different variables which describe mortgage rates and terms and single family housing starts. Two different types of tests for economic causality are used. The results indicate that neither credit rationing nor mortgage rates affect housing starts for the period 1963–1980. There is some evidence that housing prices have a causal relationship to housing starts, possibly reflecting speculative motives. On balance, the results are consistent with the rational expectations theory.     

Speculation-led economic development: a post-Keynesian interpretation of financial liberalization programmes in the Third World

The paper presents a post-Keynesian interpretation of the consequences of financial liberalization (FL) programmes in less developed countries (LDCs). The interpretation advanced here incorporates the new-Keynesian concepts of adverse selection and credit rationing into a post-Keynesian framework. It is argued that FL can lead to a particular kind of development, ‘speculation-led economic development’, which is characterized by a preponderance of risky investment practices and shaky financial structures. In addition, FL is likely to induce an increase in directly unproductive profit-seeking activities, a greater likelihood of financial crises, a misallocation of credit and, ultimately, diminished rates of real sector economic growth. Given the likelihood of these outcomes (as well as their realization in LDCs that have implemented FL), FL programmes are argued to be a poor foundation for stable and sustained real-sector economic growth, especially in the context of resource-scarce LDCs.     

Monetary Regime Choice and Optimal Credit Rationing at the Official Rate: The Case of Russia

ABSTRACT

Stabilizing monetary policy in a small open economy is constrained by the open economy trilemma. In this paper, we investigate whether foreign exchange market interventions and the Central Bank’s credit rationing at the official rate (CROR) may soften this constraint and improve the results of monetary policy for different monetary regimes. We construct a dynamic stochastic general equilibrium (DSGE) model appropriate for analyzing the forward-looking behavior of households facing non-zero probabilities of losing access to financial market and CROR. We have found significant credit rationing in the quarterly Russian data of 2001:Q1–2014:Q2. The probability of losing access to financial market and the probability of CROR are estimated as 22% and 66%, respectively. Using Russian data of 2001:Q1–2014:Q2 we demonstrate that CROR provoked forward-looking activity in financial market, which led to more Ruble devaluation in the crises of 2008–2009. It improved poor countercyclical performance of two Russian monetary policy rules, whereas made small effect on welfare. Welfare maximization exercises reveal a tradeoff between low-inflation and high-welfare solutions and favor of a floating exchange rate regime. We found the optimal value of the probability of CROR in both exchange rate-based and Taylor rule-based models but resulting improvement in welfare is very small.     

An empirical analysis of the demand for houses durables and nondurables

A standard neoclassical model of intertemporal choice is applied to households' demand for nondurables, durables and houses, so that particularly the role of credit rationing is stressed. Empirical analysis is performed with Finnish quarterly data. The main result of the study is that relative prices are of little significance, whereas credit rationing is found to play an important role, affecting both the desired levels of demand and the speed of adjustment.     

农地确权、信贷配给释缓与农村金融的深度发展*

作为一项基础性、制度环境层面的变革，农地确权帮助更多农户进入金融市场、促进农村金融宽度意义上的“量”变作用已经初步显现。但是，它是否可以提高农户贷款数量，缓解信贷配给并促进农村金融深度意义上的“质”变？这是一个重要但鲜有研究的问题。本文从供给、需求、交易成本、价格、风险配给等角度，分析了农地确权缓解信贷配给、促进农村金融深度发展的理论机理，并通过有序多分类变量回归及倾向得分匹配方法进行实证分析。研究表明，农地确权对农户金融参与深度的影响主要表现为：因降低信息成本而缓解价格配给，因弱化农户的损失规避心理而缓解风险配给；同时，数量配给和交易成本配给的释缓作用尚未充分显示。     

Credit rationing in a disequilibrium macroeconomic model

This paper develops a four-market disequilibrium macroeconomic model. The model includes the labor, output, bond, and money markets. A number of papers have considered the interactions between the labor and output markets. Fewer papers have considered the financial sectors. This paper is an exploration into the role of financial market disequilibrium (e.g., credit rationing) within a disequilibrium macroeconomic model.     

PRICE-COST MARGINS AND INDUSTRY STRUCTURE IN DEVELOPING COUNTRIES: THE CASE OF KOREA*

The structure-conduct-performance paradigm is tested using 4-digit SIC Korean industry data for 1981 and 1986. The study investigates whether the observed institutional differences between developed and developing countries affects the performance hypothesis. The results suggest that structure and conduct variables influence price-cost margins in much the same way as they do in developed countries. Nevertheless, the Korean government's credit rationing policies, by creating entry barriers, have the most important effects on industry performance.