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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. Rumen Dobrinsky & Gábor Korösi & Nikolay Markov & László Halpern, 2004. "Firms’ Price Markups and Returns to Scale in Imperfect Markets: Bulgaria and Hungary," William Davidson Institute Working Papers Series 2004-710, William Davidson Institute at the University of Michigan.
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  9. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
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  11. Xavier Vives, 2002. "Private Information, Strategic Behavior, and Efficiency in Cournot Markets," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 361-376, Autumn.
  12. 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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  14. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March.
  15. Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  16. Vikt�ria Kocsis, 2005. "Network Asymmetries and Access Pricing in Cellular Telecommunications," Tinbergen Institute Discussion Papers 05-085/1, Tinbergen Institute.
  17. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
  18. 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.
  19. 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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