CREDIT MARKET FAILURES AND POLICY
- Authors: Minelli, E; Modica, S
- Publication year: 2009
- Type: Articolo in rivista (Articolo in rivista)
- Key words: Credit market imperfections, Optimal con- tracts, Development economics.
- OA Link: http://hdl.handle.net/10447/47952
Abstract
In a simplified version of the Stiglitz–Weiss (1981) model of the credit market we characterize optimal policies to cor- rect market failures. Widely applied policies, notably interest–rate subsidies and investment subsidies, are compared to the theoretical optimum. Some comments on the trade-off between credit subsidy and infrastructural investment are added in the conclusions.