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Why do (or do not) banks share customer information? A comparison of mature private credit markets and markets in transition

  • Iván Major

    ()

    (Institute of Economics, Hungarian Academy of Sciences)

Credit bureaus administering information sharing among lenders about customers reduce information asymmetry and should be key to modern credit markets. In contrast to former studies, we show that willingness to share information depends more on institutions and market concentration than on demand or other market characteristics such as, regional diversity or local monopolies. We show using infinite period models with strategic behavior that lenders' interest to share information depends on market concentration and the type of information sharing arrangement. Sharing bad information only is the dominant strategy if banks think long-term. If banks are myopic no information sharing may occur.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0603.

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Date of creation: 24 Apr 2006
Date of revision: 24 Apr 2006
Handle: RePEc:has:discpr:0603
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  1. Pagano, Marco & Jappelli, Tullio, 1993. " Information Sharing in Credit Markets," Journal of Finance, American Finance Association, vol. 48(5), pages 1693-1718, December.
  2. Berthold Herrendorf & Akos Valentinyi, 2006. "Which Sectors Make the Poor Countries so Unproductive?," 2006 Meeting Papers 304, Society for Economic Dynamics.
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  11. Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Amir Ziv, 1993. "Information Sharing in Oligopoly: The Truth-Telling Problem," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 455-465, Autumn.
  13. Vercammen, James A, 1995. "Credit Bureau Policy and Sustainable Reputation Effects in Credit Markets," Economica, London School of Economics and Political Science, vol. 62(248), pages 461-78, November.
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  18. Anders Frederiksen & Elod Takats, 2004. "Optimal incentive mix of performance pay and efficiency wage," IEHAS Discussion Papers 0418, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  19. Kata Bognar & Lones Smith, 2004. "We Can't Argue Forever," IEHAS Discussion Papers 0415, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
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