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The impact of credit reporting system development on banking sector openness: Evidence from 101 economies

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  • Yang, Tianjian
  • Zuo, Jingxuan
  • Han, Minghui
  • Wei, Dongming

Abstract

Banking sector openness is a crucial component in promoting global economic and financial integration. Based on cross-country sample data, this study examines whether improvements in the development of credit reporting systems can expand the market share of foreign banks and enhance banking sector openness. The findings reveal that the advancement of credit reporting systems can increase the market share of foreign banks in host countries. The mechanism behind this effect is that credit reporting system development reduces the information asymmetry foreign banks face in host countries, thereby narrowing their informational cost disadvantage when competing with domestic banks. However, the effect of credit reporting system development on expanding the market share of foreign banks is mainly applicable to advanced markets. Additionally, countries with varying levels of government economic involvement require different types of credit reporting systems. Further analysis shows that the impact of credit reporting systems is also influenced by the competitive environment and regulatory framework of the banking sector; beyond the extent of credit reporting coverage, the depth of information collected by the credit reporting system also promotes the openness of the banking sector. This study provides new insights for promoting global financial openness.

Suggested Citation

  • Yang, Tianjian & Zuo, Jingxuan & Han, Minghui & Wei, Dongming, 2025. "The impact of credit reporting system development on banking sector openness: Evidence from 101 economies," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:pacfin:v:94:y:2025:i:c:s0927538x25002677
    DOI: 10.1016/j.pacfin.2025.102930
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    Keywords

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    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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