Information Sharing and Information Acqusition in Credit Markets

A. Karapetyan, B. Stacescu

Research output: Working paperDiscussion paperOther research output

Abstract

Since information asymmetries have been identified as an important source of bank profits, it may seem that the establishment of information sharing arrangements such as credit registers and bureaus will lead to lower investment in acquiring information. However, banks base their decisions on both hard and soft information, and it is only the former type of data that can be communicated credibly. We show that hard and soft information are strategic substitutes, and that when hard information is shared, banks will invest more in soft information. This can potentially lead to more accurate lending decisions and favor small, informationally opaque borrowers. Higher invest- ment in soft technology offers important implications for borrower switching. We test our theory using firm-level data from 24 countries.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages72
Volume2009-07 S
DOIs
Publication statusPublished - 2009

Publication series

NameEBC Discussion Paper
Volume2009-07 S

Fingerprint

Credit markets
Information sharing
Soft information
Firm-level data
Information asymmetry
Lending decisions
Profit
Credit
Strategic substitutes

Keywords

  • Bank competition
  • credit bureaus
  • hard information
  • soft information

Cite this

Karapetyan, A., & Stacescu, B. (2009). Information Sharing and Information Acqusition in Credit Markets. (EBC Discussion Paper; Vol. 2009-07 S). Tilburg: EBC. https://doi.org/10.2139/ssrn.1269344
Karapetyan, A. ; Stacescu, B. / Information Sharing and Information Acqusition in Credit Markets. Tilburg : EBC, 2009. (EBC Discussion Paper).
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Karapetyan, A & Stacescu, B 2009 'Information Sharing and Information Acqusition in Credit Markets' EBC Discussion Paper, vol. 2009-07 S, EBC, Tilburg. https://doi.org/10.2139/ssrn.1269344

Information Sharing and Information Acqusition in Credit Markets. / Karapetyan, A.; Stacescu, B.

Tilburg : EBC, 2009. (EBC Discussion Paper; Vol. 2009-07 S).

Research output: Working paperDiscussion paperOther research output

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Karapetyan A, Stacescu B. Information Sharing and Information Acqusition in Credit Markets. Tilburg: EBC. 2009. (EBC Discussion Paper). https://doi.org/10.2139/ssrn.1269344