Template-Type: ReDIF-Paper 1.0

Author-Name:  Susanne Steger
Author-X-Name-First: Susanne
Author-X-Name-Last: Steger

Author-Name:  Helke Waelde
Author-X-Name-First: Helke
Author-X-Name-Last: Waelde

Title: A Reconsideration of the Stiglitz-Weiss Model with a Discrete Number of Borrower Types

Abstract: In this paper we show that the equilibrium in the Stiglitz-Weiss model (Stiglitz and
Weiss, 1981) is a two-interest rate equilibrium. For this we use the true return-function
for banks shown by Arnold (2005), the assumption of Bertrand competition and make
a consideration for a discrete number of borrowers. Rationing only affects one group of
the borrowers, i.e. the borrowers with a safe project. The risky group always receives
the funds it demands.
Length:  20 pages
Creation-Date:  2007-08
File-URL: http://www.bgpe.de/texte/DP/028_steger_waelde.pdf
File-Format: Application/pdf
File-Function: First version, 2007
Number: 028
Classification-JEL: D82, E51, G21
Keywords: credit rationing, asymmetric information, adverse selection
Handle: RePEc:bav:wpaper:028_steger_waelde