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Consumer Bankruptcy and Information

Author

Listed:
  • Jason Allen
  • H. Evren Damar
  • David Martinez-Miera

Abstract

We analyze the relationship between the intensity of banks’ use of soft-information and household bankruptcy patterns. Using a unique data set on the universe of Canadian household bankruptcies, we document that bankruptcy rates are higher in markets where the collection of soft, or qualitative locally gathered information, is the weakest. Using two Canadian bank mergers as exogenous variation in local market structure, we show that the differences in bankruptcy rates are not due to changes in the supply of credit. Our findings indicate that screening via hard-information is not a perfect substitute for soft-information. Instead, the two appear to be complements.

Suggested Citation

  • Jason Allen & H. Evren Damar & David Martinez-Miera, 2012. "Consumer Bankruptcy and Information," Staff Working Papers 12-18, Bank of Canada.
  • Handle: RePEc:bca:bocawp:12-18
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jbfina:v:83:y:2017:i:c:p:121-134 is not listed on IDEAS
    2. Kartashova, Katya & Tomlin, Ben, 2017. "House prices, consumption and the role of non-Mortgage debt," Journal of Banking & Finance, Elsevier, vol. 83(C), pages 121-134.

    More about this item

    Keywords

    Financial institutions; Financial services;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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