Do Banks Ration Credit to New Enterprises? And Should Governments Intervene?
Article first published online: 7 JAN 2003
Scottish Economic Society 2002
Scottish Journal of Political Economy
Volume 49, Issue 2, pages 162–195, May 2002
How to Cite
Parker, S. C. (2002), Do Banks Ration Credit to New Enterprises? And Should Governments Intervene?. Scottish Journal of Political Economy, 49: 162–195. doi: 10.1111/1467-9485.00227
- Issue published online: 7 JAN 2003
- Article first published online: 7 JAN 2003
- Cited By
Do banks deny credit to new start–ups? The presumption that they do has motivated government intervention in several forms, including publicly backed loan guarantee schemes in the UK and elsewhere. This paper presents an overview of the modern theory and evidence of credit rationing, and concludes that the case for credit rationing is weak. Ultimately, theoretical arguments for or against credit rationing are inconclusive, so evidence is needed to decide the issue. The evidence is not supportive of the view that credit rationing is an important or widespread phenomenon.