Abstract
This paper introduces a model of the lending decision that accounts for credit rationing behavior as it captures fundamental aspects of the credit channel of monetary policy. The model distinguishes between the credit channel’s bank-lending and balance-sheet effects in its representation of how different types of shocks influence lending. It is hoped that the model will facilitate and encourage greater attention in the undergraduate curriculum to the credit channel as well as credit rationing, the significance of both having been accentuated by the recent sub-prime lending crisis and the Fed’s expanded responsibilities in the financial markets.
Recommended Citation
(2026)
"Advancing the Credit Channel and Credit Rationing in the Undergraduate Curriculum: A Useful Model,"
Journal of Economics and Finance Education: Vol. 9:
Iss.
1, Article 2.
Available at:
https://scholarship.rollins.edu/jefe/vol9/iss1/2
