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The Stiglitz-Weiss Condition for Rationing and Endogenous Self-finance: A Comment

10 Pages Posted: 27 Jun 2008 Last revised: 16 Sep 2008

Peter S. Faynzilberg

The Aleph Group, LLC

Date Written: August 2008

Abstract

Contrary to the assertions of de Meza and Webb (2006), we find that (i) there is no conflict between borrowing costs and the condition for rationing put forth in Stiglitz and Weiss (1981), and (ii) entrepreneurs finance production solely by debt. It is shown also that under the timing conventions of Stiglitz and Weiss (1981) borrowers use either none or all of their liquid endowments.

Keywords: Incomplete information, investment, moral hazard

JEL Classification: D41, D45, D53

Suggested Citation

Faynzilberg, Peter S., The Stiglitz-Weiss Condition for Rationing and Endogenous Self-finance: A Comment (August 2008). Available at SSRN: https://ssrn.com/abstract=1151377 or http://dx.doi.org/10.2139/ssrn.1151377

Peter S. Faynzilberg (Contact Author)

The Aleph Group, LLC ( email )

Plainfield, NJ 07060
United States

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