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The effect of information sharing between lenders on access to credit, cost of credit, and loan performance – Evidence from a credit registry introduction

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  • Behr, Patrick
  • Sonnekalb, Simon

Abstract

Using a rich dataset from a commercial bank in Albania, we utilize the introduction of a public credit registry by the Albanian central bank in January 2008 as a natural experiment to analyze the effect of information sharing between lenders on (1) access to credit, (2) cost of credit, and (3) loan performance. Our results suggest that information sharing by means of a credit registry does not affect access to or cost of credit, but improves loan performance. Specifically, loans granted after the introduction of the credit registry are 3% points less likely of turning problematic, representing a 35% reduction of the overall sample average arrear probability. We further find that the effect is more pronounced for repeat borrowers and in areas, where competition is weak. This indicates that information sharing among lenders improves loan performance mainly by disciplining borrowers to repay in their concern about future access to credit.

Suggested Citation

  • Behr, Patrick & Sonnekalb, Simon, 2012. "The effect of information sharing between lenders on access to credit, cost of credit, and loan performance – Evidence from a credit registry introduction," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 3017-3032.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:11:p:3017-3032 DOI: 10.1016/j.jbankfin.2012.07.007
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    References listed on IDEAS

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    Cited by:

    1. Dierkes, Maik & Erner, Carsten & Langer, Thomas & Norden, Lars, 2013. "Business credit information sharing and default risk of private firms," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2867-2878.
    2. Sharma, Priyanka, 2017. "Is more information always better? A case in credit markets," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 269-283.
    3. repec:eee:riibaf:v:42:y:2017:i:c:p:1123-1136 is not listed on IDEAS
    4. Baah Aye Kusi & Elikplimi Komla Agbloyor & Vera Ogeh Fiador & Kofi Achampong Osei, 2016. "Does Information Sharing Promote or Detract from Bank Returns: Evidence from Ghana," African Development Review, African Development Bank, vol. 28(3), pages 332-343, September.

    More about this item

    Keywords

    Information sharing; Credit registry; Repayment incentives; Loan performance;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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