Regularity and Pareto improving on financial equilibria with price-dependent borrowing restrictions

► We consider a general equilibrium model, with two periods and numeraire assets. ► Price-dependent upper bounds on loans restrict household financial participation. ► Equilibria exist and are generically regular, finite in number and suboptimal. ► For a significant subset of economies, associated equilibria are Pareto improvable. ► Pareto improvement is obtained via a local change of participation constraints.