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The experience of the Carter era suggests the effect of credit restraint can be large.
As a consequence, private firms hold cash and issued equity for hedging the negative effect of credit contractions.
The Treasury report also said that global economic growth had "performed exceptionally well" this year, but that the effect of credit market problems on global capital flows remained difficult to measure.
This study will investigate these questions via a regression discontinuity design around the credit threshold (focusing on the effect of credit), and a randomized experiment (focusing on whether information or savings interventions reduce demand for credit).
W. Scott Frame, A. Srinivasan, and L. Woosley, "The Effect of Credit Scoring on Small-Business Lending," Journal of Money, Credit and Banking 33, no. 3 (August 2001): 813-825.
The regulations expected to be signed by President Obama this week, Europe's debt woes, the slow pace of the recovery and the effect of credit constraints were factors that have lowered many analysts' outlooks for banks.
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Effects of credit rating agencies on both sovereign economies and the global economy have increased.
"She ignores effects of credit scoring and outrageous fees banks are charging for those refinancings.
I extend the model to an OLG model with altruism to study the effects of credit constraints on optimal policies.
"The Aggregate Effects of Credit Market Frictions: Evidence from Firm-level Default Assessments". Besley, Tim, Isabelle Roland, and John Van Reenen, MIT Sloan Working Paper 5544-18.
Combined with enforcement of fair housing laws, credit scores offer opportunity to those who deserve mortgages and other loans — and protection from the bad effects of credit going to those who don't deserve it.
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