Bank Loan Behavior and Credit Information Sharing: An Insight from Measurement Costs
We find that the measurement cost of creditworthiness is important when considering the behavior of banks. A set of credit infrastructures, i.e. a credit rating system, will help to increase the incentive of the banks to make unsecured credit loans, and thus help financial development. However, since the credit information sharing system is a kind of 'public good', it will not come into being endogenously in most cases without the driving force of the government.
Volume (Year): 10 (2007)
Issue (Month): 4 ()
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