The concept in economics and banking of credit rationing describes the situation when a bank limits the supply of loans, although it has enough funds to loan out, and the supply of loans has not yet equalled the demand of prospective borrowers. Changing the price of the loans (interest rate) does not equilibrate the demand and supply of the loans.
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Famous quotes containing the word credit:
“Laws remain in credit not because they are just, but because they are laws. That is the mystic foundation of their authority; they have no other.”
—Michel de Montaigne (1533–1592)