When a lender refuses to make a loan,although borrowers are willing to pay the stated interest rate or even a higher rate,the bank is said to engage in

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Credit rationing occurs when a lender limits the supply of credit to borrowers, usually due to risk aversion or inability to accurately assess the creditworthiness of potential borrower. The lender may refuse to lend even if the borrower is willing to pay a higher interest rate. This is different from coercive bargaining, which involves using intimidation or threats to force someone into an agreement, and strategic holding out, which is a negotiating tactic where one party refuses to make the first move until the other party makes a concession. Collusive behavior involves two or more parties conspiring to manipulate a market for their own benefit.

When a Lender Refuses to Make a Loan,although Borrowers Are