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Sharing information in the credit market: Contract-level evidence from U.S. firms

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  • Doblas-Madrid, Antonio
  • Minetti, Raoul

Abstract

We investigate the impact of lenders' information sharing on firms' performance in the credit market using rich contract-level data from a U.S. credit bureau. The staggered entry of lenders into the bureau offers a natural experiment to identify the effect of lenders' improved access to information. Consistent with the predictions of Padilla and Pagano (1997, 2000) and Pagano and Jappelli (1993), we find that information sharing reduces contract delinquencies and defaults, especially when firms are informationally opaque. The results also reveal that information sharing does not reduce the use of guarantees, that is, it may not loosen lending standards.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 109 (2013)
Issue (Month): 1 ()
Pages: 198-223

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Handle: RePEc:eee:jfinec:v:109:y:2013:i:1:p:198-223

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Web page: http://www.elsevier.com/locate/inca/505576

Related research

Keywords: Information asymmetries; Credit contracts; Credit bureaus;

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References

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Citations

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Cited by:
  1. Artashes Karapetyan & Bogdan Stacescu, 2010. "Information sharing and information acquisition in credit markets," Working Paper 2010/24, Norges Bank.
  2. Karapetyan, Artashes & Stacescu, Bogdan, 2014. "Does information sharing reduce the role of collateral as a screening device?," Journal of Banking & Finance, Elsevier, vol. 43(C), pages 48-57.
  3. Brown, Martin & Degryse, Hans & Höwer, Daniel & Penas, María Fabiana, 2012. "How do banks screen innovative firms? Evidence from start-up panel data," ZEW Discussion Papers 12-032, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Francesca Bartoli & Giovanni Ferri & Pierluigi Murro & Zeno Rotondi, 2014. "Bank support and export: evidence from small Italian firms," Small Business Economics, Springer, vol. 42(2), pages 245-264, February.
  5. Verónica Balzarotti & Alejandra Anastasi, 2013. "Does Competition for Novice Borrowers Hurt Access to Finance? An Analysis in a Context of High Risk and Low Outreach," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(69), pages 101-149, December.
  6. Maurizio Iacopetta & Alessandro Giovannini & Raoul Minetti, 2013. "Financial markets banks and growth: disenttangling the links," Sciences Po publications 2013-23, Sciences Po.
  7. Maik Dierkes & Carsten Erner & Thomas Langer & Lars Norden, 2012. "Business credit information sharing and default risk of private firms," Mo.Fi.R. Working Papers 64, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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