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Information Sharing, Access to Finance, Loan Contract Design, and the Labor Market

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  • Beck, Thorsten
  • Behr, Patrick
  • de Freitas Oliveira, Raquel

Abstract

Exploiting an exogenous change in the reporting threshold of Brazil’s public credit registry, we show an increase in borrowing for newly included risky firms and lower interest rates for safer firms. The additional lending comes primarily from new private bank-firm relationships, whereas the reduction in interest rates is driven by incumbent lenders. While collateralization decreases, incumbent lenders shorten loan maturities, pointing to important changes in loan contract design. Risky borrowers show a decline (increase) in loan default with incumbent (new) lenders. The policy change translates into higher employment. Our results are consistent with disciplining and competition hypotheses of information sharing and highlight important heterogeneities across firms’ risk profiles and lender types.

Suggested Citation

  • Beck, Thorsten & Behr, Patrick & de Freitas Oliveira, Raquel, 2023. "Information Sharing, Access to Finance, Loan Contract Design, and the Labor Market," CEPR Discussion Papers 18131, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18131
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    Cited by:

    1. is not listed on IDEAS
    2. Wandia, Elizabeth & Muathe, Stephen Makau, 2024. "Leveraging Business Globalization to Accelerate Performance of Commercial Banks in Kenya," OSF Preprints nscq3, Center for Open Science.
    3. repec:osf:osfxxx:nscq3_v1 is not listed on IDEAS

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    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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