CREDIT RATIONING - MICROECONOMIC FOUNDATIONS AND MACROECONOMIC IMPLICATIONS

The article offers a microeconomic foundation for credit rationing rooted in risk aversion on the side of the lender. This leads to an upper loan limit which the bank is not willing to exceed independently of the interest rate. The upper bound directly leads to credit rationing if the loan demand is interest-inelastic otherwise some interest rate rigidity must be assumed. An example for this is the way many german banks calculate the loan rate (''Marktzinsmethode''). In a simple macroeconomic model it is demonstrated that a restrictive monetary policy can destabilize the economy leading to stagflation.