Research Discussion Papers, Bank of Finland
No 3/2012:
Quantity rationing of credit
George A. Waters ()
Abstract: Quantity rationing of credit, when firms are denied loans,
has greater potential to explain macroeconomic fluctuations than borrowing
costs. This paper develops a DSGE model with both types of financial
frictions. A deterioration in credit market confidence leads to a temporary
change in the interest rate, but a persistent change in the fraction of
firms receiving financing, which leads to a persistent fall in real
activity. Empirical evidence confirms that credit market confidence,
measured by the survey of loan officers, is a significant leading indicator
for capacity utilization and output, while borrowing costs, measured by
interest rate spreads, is not.
Keywords: quantity rationing; credit; VAR; (follow links to similar papers)
JEL-Codes: E10; E24; E44; E50; (follow links to similar papers)
26 pages, January 17, 2012
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
BoF_DP_1203.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Minna Nyman ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
