Studies of Small Business Finance: Credit Rationing and Small Business Finance

摘要

In their study, the authors explain credit rationing and how it affects small businesses' chances of financing through loans. With the help of a mathematical model the decision processes of two lender types are discussed. The first type of lender, an asset-transformer, acquires funds in anticipation of loan demand, at a fixed-rate and is relatively less sensitive to an applicant's qualifications. The second lender type is a broker, who acquires lendable funds as needed and, assuming constantly increasing interest rates, has relatively greater costs. A broker will also be more critical of applicant risk than the asset-transformer.