Intensive Lecture: Credit Rationing: Causes and Solutions
October 2, 2010
Professor Uwe Vollmer of the University of Leipzig (Germany) held an intensive lecture “Credit Rationing: Causes and Solutions” at Keio University on October 2, 2010.
In his lecture, Professor Vollmer introduced the issue of loan credit rationing by banks from the standpoint of microeconomics. In particular, the lecture addressed, in detail, the issue of the information asymmetry which arises in financing between entrepreneurs and banks. When there is an information gap between the entrepreneur who needs funds to execute a project and the bank which is the lender, the bank cannot distinguish among different types of entrepreneurs. So if the project later fails, the bank cannot determine if the failure was due to negligence by the entrepreneur or despite the entrepreneur’s best efforts. To address this, Professor Vollmer simply explained the foundations of a mechanism whereby entrepreneurs would not be deemed negligent. The lecture was attended by over 30 students, and was followed by a lively question and answer session.