DOI: 10.3390/g16010001 ISSN: 2073-4336
Asymmetric Information and Credit Rationing in a Model of Search
Cemil SelcukThis paper presents a competitive search model focusing on the impact of asymmetric information on credit markets. We show that limited entry by lenders results in endogenous credit rationing, which, in turn, plays a key role in managing adverse selection and prevents the credit market from collapsing.