Adverse selection, endogenous borrowing constraints and firm growth

Arthur Fishman, Miriam Krausz

Research output: Contribution to journalArticlepeer-review

Abstract

If banks face asymmetric information about loan quality, endogenous borrowing constraints which restrict the size of new firms may emerge in equilibrium. High quality firms reduce financing costs by starting off small and increasing their size over time.

Original languageEnglish
Pages (from-to)219-221
Number of pages3
JournalEconomics Letters
Volume108
Issue number2
DOIs
StatePublished - Aug 2010

Keywords

  • Asymmetric information
  • Endogenous borrowing constraints
  • Firm growth

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