Purpose

The purpose of this study is to propose a model of competition between a formal lender (bank) and an informal lender (moneylender) with informational asymmetry between these two lenders. Further, the authors introduce capacity constraint on the lending capacity of the moneylender and assume that borrowers differ in risk and wealth.

Design/methodology/approach

The solution concept of Nash equilibrium has been used to derive the optimal strategies of the lenders.

Findings

The equilibrium strategies in most of the results depend on the difference between the expected returns from risky and safe projects where the risky project has higher expected returns. The credit market is segmented in terms of risk and wealth levels. Rationing of poor safe borrowers from the credit market is inevitable when the moneylender's capacity is sufficiently small, suggesting a low-income trap for them. Further, when moneylender has capacity constraint of some form, a zero-profit outcome is never a Nash equilibrium outcome.

Research limitations/implications

There is a possibility of collusion between the lenders. However, the authors do not derive all possible outcomes under capacity constraint

Practical implications

When the informal lender has limited capacity, competition between formal and informal lenders may not alleviate credit rationing, instead aggravate the problem. Thus, the government should devise policies to ensure credit availability to resource poor households

Originality/value

While the literature models strategic interaction between lenders under the assumption of zero-profit (Bertrand Paradox) condition, this study shows that zero profit is not the only outcome under such a set-up. Also, in presence of capacity constraint of the moneylender, a zero-profit outcome is never a Nash equilibrium outcome for the lenders. There is an optimal contract at which the lenders differentiate in terms of repayment and collateral and earn positive profits under certain conditions.

中文翻译：

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信贷市场的信息不对称、能力约束和分割

目的

本研究的目的是提出一个正式贷款人（银行）和非正式贷款人（货币贷款人）之间的竞争模型，这两个贷款人之间存在信息不对称。此外，作者引入了对放债人借贷能力的能力约束，并假设借款人的风险和财富不同。

设计/方法论/途径

纳什均衡的解决方案概念已被用来推导贷款人的最优策略。

发现

大多数结果中的均衡策略取决于风险项目和安全项目的预期回报之间的差异，其中风险项目具有更高的预期回报。信贷市场根据风险和财富水平进行细分。当放债人的能力足够小时，信贷市场上的贫困安全借款人的配给是不可避免的，这表明他们陷入了低收入陷阱。此外，当放债人受到某种形式的能力限制时，零利润结果永远不是纳什均衡结果。

研究局限性/影响

贷款人之间存在串通的可能性。然而，作者并没有得出容量限制下所有可能的结果

实际影响

当非正规贷款机构的能力有限时，正规贷款机构和非正规贷款机构之间的竞争可能不会缓解信贷配给，反而会加剧问题。因此，政府应制定政策，确保资源贫困家庭获得信贷

原创性/价值

虽然文献在零利润（伯特兰悖论）条件下模拟了贷方之间的战略互动，但本研究表明，零利润并不是这种设置下的唯一结果。此外，在存在放债人能力限制的情况下，零利润结果对于放贷人来说永远不是纳什均衡结果。存在一种最优合约，贷款人在还款和抵押品方面有所区别，并在一定条件下赚取正利润。