Information Sharing and Information Acquisition in Credit Markets
Journal article, Peer reviewed
Permanent lenke
http://hdl.handle.net/11250/222932Utgivelsesdato
2014Metadata
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Sammendrag
We examine the effect of information sharing via credit bureaus or credit registers
on banks’ incentives to collect information about their borrowers. Information
asymmetries have been identified as an important source of bank profits, and sharing
knowledge about borrowers can reduce those rents. Despite that, we show that banks’
incentives to collect information actually increase in the presence of information sharing.
The reason is that when hard, standardized information is shared, banks’ incentives to
invest in soft, nonverifiable information increase. The result can be more accurate
lending decisions and improved welfare
Beskrivelse
This is the authors’ final, accepted and refereed manuscript to the article. Publisher’s version available at http://dx.doi.org/10.1093/rof/rft031