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Creditor information registries and relationship lending

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  • Bertrand, Jérémie
  • Klein, Paul-Olivier

Abstract

Banks rely on information to assess the creditworthiness of borrowers. They can secure this information in two ways: on the one hand, they can access public information on the firm from credit databases. On the other hand, they can build a relationship with the firm and secure private, more precise, information on the firm’s prospects. In this paper, we investigate what happens to the collection of private information, when banks have access to a broader scope of public information. We argue that banks can either focus on public information and reduce their collection of private information (which is costly), or see the collection of private information as strategic, giving them an advantage when allocating credit.

Suggested Citation

  • Bertrand, Jérémie & Klein, Paul-Olivier, 2021. "Creditor information registries and relationship lending," International Review of Law and Economics, Elsevier, vol. 65(C).
  • Handle: RePEc:eee:irlaec:v:65:y:2021:i:c:s0144818820301794
    DOI: 10.1016/j.irle.2020.105966
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    More about this item

    Keywords

    Creditor information; Relationship lending; Information asymmetries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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