Kjenstad, Einar C.; Su, Xunhua; Zhang, Li - In: The Quarterly Review of Economics and Finance 55 (2015) C, pp. 20-27
We construct a synthesized model to study credit rationing by loan size. In our model, the borrower faces a trade-off between raising debt and exerting costly effort to undertake an investment project. In the absence of agency costs, increasing the loan size at the equilibrium interest rate...