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The Performance of Credit Markets under Asymmetric Information about Project Means and Variances

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 March 1992

Abstract

Generalizes existing models of credit markets under asymmetric information. The general model accommodates the adverse selection arguments of Stiglitz and Weiss and the favourable selection arguments of de Meza and Webb, and contains their models as special cases. Market equilibrium may exhibit credit rationing, while aggregate investment may be above or below the first‐best level. A novel issue presented is that inefficiencies may involve not merely the volume of investment but also its composition.

Keywords

Citation

Hillier, B. and Ibrahimo, M.V. (1992), "The Performance of Credit Markets under Asymmetric Information about Project Means and Variances", Journal of Economic Studies, Vol. 19 No. 3. https://doi.org/10.1108/01443589210027257

Publisher

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MCB UP Ltd

Copyright © 1992, MCB UP Limited