Finance and economic development in a model with credit rationing

Arcand, Jean-Louis L ; Berkes, Enrico ; Panizza, Ugo

Geneva : Graduate Institute of International and Development Studies, 2013 . - 13 p.

Graduate Institute of International and Development Studies working paper ; no. 02/2013

Abstract: This paper develops a simple model with credit rationing and endogenous default risk in which the expectation of a bailout may lead to a financial sector which is too large with respect to the the social optimum. The paper concludes with a short discussion of how this model could be used as a building block for models aimed at endogenizing the probability of a bailout, and discussing the relationship between the size of the financial sector and economic growth in the presence of default risk.


The record appears in these collections:
Academic Departments > International Economics Department
Research Clusters > Development Policies and Practices
Research Clusters > Trade and Economic Integration
Research Clusters > Finance and Development
Research Clusters > Governance
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 Record created 2013-03-08, last modified 2017-10-24


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