A Reconsideration of the Stiglitz-Weiss Model with a Discrete Number of Borrower Types

In this paper we show that the equilibrium in the Stiglitz-Weiss model (Stiglitz and Weiss, 1981) is a two-interest rate equilibrium. For this we use the true return-function for banks shown by Arnold (2005), the assumption of Bertrand competition and make a consideration for a discrete number of borrowers. Rationing only affects one group of the borrowers, i.e. the borrowers with a safe project. The risky group always receives the funds it demands.

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Year of publication:	2007
Authors:	Steger, Susanne ; Waelde, Helke
Publisher:	Nürnberg : Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)
Subject:	credit rationing \| asymmetric information \| adverse selection

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Series:	BGPE Discussion Paper ; 28
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	747217777 [GVK] hdl:10419/73339 [Handle] RePEc:bav:wpaper:028_steger_waelde [RePEc]
Classification:	D82 - Asymmetric and Private Information ; E51 - Money Supply; Credit; Money Multipliers ; G21 - Banks; Other Depository Institutions; Mortgages
Source:	EconStor

Persistent link: https://www.econbiz.de/10010294634