Uncertainty, market power and credit rationing

Paul Ramskogler

Publication: Working/Discussion PaperWU Working Paper

Abstract

This paper explores the nexus between uncertainty and credit restrictions. A Post Keynesian approach to an explanation of access rationing to credit is developed and contrasted with the dominant relationship lending school. It is argued that access rationing to credit has be understood in terms of uncertainty and power. Differences in systemic uncertainty to which hetrogenous market participants are exposed can explain the reluctance of banks to lend to certain applicants. Monopsonistic power and uncertainty further help to understand why banks of a different size show differences in their lending behavior. (author's abstract)
Original languageEnglish
Publication statusPublished - 1 Nov 2007

Publication series

NameDepartment of Economics Working Paper Series
No.105

WU Working Paper Series

  • Department of Economics Working Paper Series

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