Volume 43, Number 171,
October-December 2012
Credit Rationing:
A Perspective from New Keynesian Economics
Abigail Rodríguez and Francisco Venegas
CONCLUSIONS

This work presented the different concepts of credit rationing proposed by New Keynesian Economics. All of them represent a relevant contribution because they provide complementary elements. It is important to highlight that the precise definition of the concept would require an explanation of why it originates, why it prevails, how it is corrected and the macroeconomic implications it carries. This text has proposed a classification of literature related to credit rationing. As shown, the different contributions can be divided into three basic areas:

  1. Granting of credit oriented towards productive activity, subject to evaluation and financing of investment projects. In general, it is assumed that information is asymmetrical because the credit applicants have greater knowledge of the characteristics of the projects for which they seek financing. This leads to problems of moral risk, adverse selection, monitoring costs and agency costs.
  2. The credit supply and contractual conditions (prices, rates and demands) are influenced by long-term relationships that creditors maintain with their borrowers. There are two opposite approaches. One says that the more solid the relationship (measured by length of duration, number of distinct credit contracts maintained by the parties and available information) the more preferential conditions the client receives. The other says that despite the strength of the relationship, the clients suffer rationing and adverse credit conditions.
  3. Rationing is linked to monetary policy or to the structure of the financial system. In the first case, rationing modifies the results expected by the monetary authority. In the second, the market structure or presence of specialists (financial intermediaries) facilitate access to credit. The availability of resources affects the macroeconomic results through investment and production.

There are various underlying hypotheses for these lines of research and some of them are still being developed. However, given the current macroeconomic context, we believe that the areas of greatest relevance are now analyzing the effects of monetary policy on real economic activity, participation of financial intermediation and the consequences of regulating activities in the banking sector. Although this text has mainly focused on literature that directly addresses the problem of credit rationing, it is useful to note that New Keynesian Economics has extended the analysis of financial markets towards other areas, such as systemic risks associated with activities in the banking sector.

BIBLIOGRAPHY

Allen, Franklin, “Credit Rationing and Payment Incentives,” The Review of Economic Studies , vol. 50, no. 4, Stockholm, University of Stockholm, October 1983, pp. 639-646.

Atanasova, Christina V. and Nicholas Wilson, “Bank Borrowing Constraints and the Demand for Trade Credit: Evidence from Panel Data,” Managerial and Decision Economics , vol. 24, no. 6-7, Malden Massachusetts, John Wiley & Sons, September-November 2003, pp. 503-514.

Baltensperger, Ernst, “Credit Rationing: Issues and Questions,” Journal of Money, Credit and Banking , vol. 10, no. 2, Columbus Ohio, The Ohio State University, May 1978, pp. 170-183.

Bhattacharya, Sudipto, Arnoud W. A. Boot and Anjan V. Thakor, Credit, In-termediation, and the Macroeconomy, Models and Perspectives, New York, Oxford University Press, 2004.

Berger, Allen N. and Gregory F. Udell, “Relationship Lending and Lines of Credit in Small Firm Finance,” The Journal of Business, vol. 68, no. 3, Chicago Illinois, University of Chicago, July 1995, pp. 351-381.

Berger, Allen N. and Gregory F. Udell, “Small Business Credit Availability and Relationship Lending: The Importance of Bank Organizational Structure,” The Economic Journal, vol. 112, no. 477, Cambridge-UK, Blackwell Publishing for the Royal Economic Society, February 2002, pp. F32-F53.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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