You are not currently logged in.
Access your personal account or get JSTOR access through your library or other institution:
Relationships and Rationing in Consumer Loans
Sugato Chakravarty and James S. Scott
The Journal of Business
Vol. 72, No. 4 (October 1999), pp. 523-544
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/10.1086/209626
Page Count: 22
We empirically examine how relationships between individual households and their creditors affect the probability of being credit‐rationed. Using a data set where the credit‐rationing of individual households is observed directly, we show that relationship duration and the number of activities between a family and a potential lender significantly lower the probability of being credit‐rationed. Additionally, we examine the relative role of relationships in determining the interest rates of two consumer loans—a mortgage loan and a “special purposes” loan—and show that mortgage loan rates are driven less by relationship factors than the special purposes loan rates.
© 1999 by The University of Chicago. All rights reserved.