# Credit absorption

- Canonical URL: https://www.gerhardmerk.de/credit-absorption
- Post ID: 591154
- Modified: 2023-07-25T21:01:38+00:00
- Language: en

## Definition

Unless otherwise defined, the fact that when banks lend to less viable companies, they can lend less, or lend on less favorable terms, to companies that are more profitable. - The bad companies suck up the given and not arbitrarily multipliable credit volume. As a result - the money and thus the scarce production factors, limited to a given stock, do not reach the best host (most favorable allocation of scarce resources), and - the economy as a whole suffers a loss. - See adverse selection, risk aversion. - Cf. IMF: Economic Issues 31: Corporate Sector Restructuring. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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