FACTORS INFLUENCING THE CREDIT RATIONING ON THE COMMERCIAL LENDING PROCESS

Adverse selection and moral hazard problem that arise due to asymmetry of information is often observed in banking sector. Accordingly, banks use credit rationing mechanism in order to mitigate the losses that arise due to asymmetric information. In this study the concept of credit rationing mechanism applied by banks is examined by exploring the manufacturing firms from various sectors which applied for a corporate loan in 2103. Logistic regression and discriminant analysis were employed in order to estimate the credit rationing. The results indicate that morality, credit history, and liquidity variables have significant impact in the commercial lending process.