Beyhaghi, Mehdi; Mahmoudi, Babak; Mohammadi, Ali - Centre of Excellence for Science and Innovation … - 2014
We provide empirical evidence of both (1) price dispersion and (2) credit rationing in the corporate loan market. We argue that these properties are caused by two factors: an adverse selection resulting from the information asymmetry between lenders and borrowers, and search frictions in...