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Information Span in Credit Market Competition

Author

Listed:
  • He, Zhiguo
  • Huang, Jing
  • Parlatore Siritto, Cecilia

Abstract

We develop a credit market competition model that distinguishes between information span (breadth) and signal precision (quality), capturing the rise of fintech/non-bank lending where traditionally subjective (“soft†) information is transformed into objective (“hard†) data. Borrower quality depends on multidimensional fundamentals, assessed through hard or soft signals. Two banks observe private hard signals, but only the specialized bank receives a soft signal. Expanding the span of hard information enables the non-specialized bank to evaluate characteristics previously only available to the specialist, and reducing its winner’s curse. By contrast, greater precision of hard signals strengthens the specialized bank’s informational advantage.

Suggested Citation

  • He, Zhiguo & Huang, Jing & Parlatore Siritto, Cecilia, 2026. "Information Span in Credit Market Competition," CEPR Discussion Papers 21310, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21310
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    File URL: https://cepr.org/publications/DP21310
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O36 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Open Innovation

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