Essays on Credit Rationing

This thesis focuses on the relationship between credit rationing and collateral value. The thesis is divided into three chapters. In Chapter 1, I make an overview on credit rationing. I emphasize that economists have linked credit rationing to problems of imperfect information (Jaffee and Russell 1976, Stiglitz and Weiss 1981). The interest rate is not the only term in debt contracts, and several papers have also investigated the role of collateral in solving credit rationing (Bester 1985). I also investigate the theory of collateral linked to the value of the assets (Williamson 1988, Shleifer and Vishny 1992). Finally, I review some empirical works. In Chapter 2, I construct a model that combines a credit rationing model with the idea that firms debt capacity and investments are linked to the value of assets in cases of distress. The model shows the link between firms debt capacities and asset values in case of distress. The main contribution of the paper is to show how each good firm derives positive externalities from the existence of bad firms. In Chapter 3, I show empirically how the value of real assets is inversely linked to credit rationing of Italian small and medium firms. I consider the relation between credit rationing and firms capital structure, rather than the relation between debt ratio and firms capital structure. In this Chapter, I also focus on the propensity score matching model, introduced by Rosenbaum and Rubin (1983), to investigate a causal link between public incentives and firms rationing.