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Information Sharing and Credit: Firm-Level Evidence from Transition Countries

  • Brown, Martin
  • Jappelli, Tullio
  • Pagano, Marco

We investigate whether information sharing among banks has affected credit market performance in the transition countries of Eastern Europe and the former Soviet Union, using a large sample of firm-level data. Our estimates show that information sharing is associatedwith improved availability and lower cost of credit to firms. This correlation is stronger for opaque firms than transparent firms, and stronger in countries with weak legal environments than countries with strong legal environments. In cross-sectional estimates, we control for variation in country-level aggregate variables that may affect credit, by examining the differential impact of information sharing across firm types. In panel estimates, we also control for the presence of unobserved heterogeneity at the firm level, as well as for changes in macroeconomic variables and the legal environment.

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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Zurich 2008 with number 3.

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Date of creation: 2008
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Handle: RePEc:zbw:gdec08:3
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  1. Zarutskie, Rebecca, 2006. "Evidence on the effects of bank competition on firm borrowing and investment," Journal of Financial Economics, Elsevier, vol. 81(3), pages 503-537, September.
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  3. Bennardo, Alberto & Pagano, Marco & Piccolo, Salvatore, 2009. "Multiple-Bank Lending, Creditor Rights and Information Sharing," CEPR Discussion Papers 7186, C.E.P.R. Discussion Papers.
  4. Padilla, A.J. & Pagano, M., 1996. "Sharing Default Information as a Borrower Discipline Device," Papers 73, Boston University - Industry Studies Programme.
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  13. Padilla, A.J. & Pagano, M., 1994. "Endogenous Communication Among Lenders and Entrepreneurial Incentives," Papers 9407, Centro de Estudios Monetarios Y Financieros-.
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  30. repec:ebd:wpaper:84 is not listed on IDEAS
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