Unfair credit allocations

This article investigates the impact of credit allocation on heterogeneous wealth entrepre- neurs. We show that with decreasing risk aversion and unobservable wealth, poorer borrowers exert more effort. As a consequence of endogenous adverse selection, they are either excluded from the market or necessarily subsidize richer borrowers in a pooling equilibrium resulting in a paradoxical and inequitable redistribution. Alternatively, a less likely separating equilibrium may occur, in which poor types bear the entire weight of separation in the form of excess risk taking

Relationship Quality and Purchase Intention and Behavior: The Moderating Impact of Relationship Strength

The purpose of this study was to investigate the link between perceived relationship quality, purchase intention and behavior, and the moderating role of relationship strength. Actual purchase data and self-reported survey data were obtained from 634 customers of a Belgian apparel retailer. Perceived relationship quality and relationship strength significantly impacted buying intention, and buying intention and relationship strength significantly impacted purchase behavior. A better relationship quality led to stronger purchase intention for customers with weaker relations with the retailer, whereas a stronger intention led to more purchase behavior for customers with a stronger relation with the retailer. Our results indicate that marketing strategies based on customer intentions and its predictors alone may not be effective because opposite results can be expected for high versus low relationship strength customers. Therefore, relationship strength should be included as well, and consumers varying in this construct should be approached in a different way. This is one of the first studies to combine actual purchase data with information based on customer interviews, which makes it possible to not only study the link between relationship quality and buying intention but also between buying intention and actual buying behavior. Moreover, the main concepts were measured more validly than in previous studies: buying behavior was measured in several ways (total expenditure, number of visits, and number of product types bought) and relationship quality was based on longitudinal buying behavior information