Credit rationing debunked: Lenders' power to classify borrowers questioned.
The study looked at why banks might limit loans to some people. They found that if projects with different profits are compared, there is no need for banks to limit loans. If projects have similar profits, banks might limit loans due to the risk of borrowers not paying back. However, if projects have different profits in a specific way, both risks can happen, leading to loan limits. Overall, the study suggests that loan limits might not be a big issue in general.