DP2184 Information Sharing, Lending and Defaults: Cross-Country Evidence
|Author(s):||Tullio Jappelli, Marco Pagano|
|Publication Date:||June 1999|
|Keyword(s):||Credit Market, Default Rate, Information Sharing|
|JEL(s):||D82, G21, G28|
|Programme Areas:||Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2184|
Theory predicts that information sharing among lenders attenuates adverse selection and moral hazard, and can therefore increase lending and reduce default rates. To test these predictions, we construct a new international data set on private credit bureaus and public credit registers. We find that bank lending is higher and proxies for default rates are lower in countries where lenders share information, regardless of the private or public nature of the information sharing mechanism. We also find that public intervention is more likely where private arrangements have not arisen spontaneously and creditor rights are poorly protected.