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How Voluntary Information Sharing Systems Form: Evidence from a U.S. Commercial Credit Bureau

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Listed:
  • José Liberti

    (De Paul University and Northwestern University)

  • Jason Sturgess

    (Queen Mary University of London)

  • Andrew Sutherland

    (MIT Sloan School of Management)

Abstract

We use the introduction of a U.S. commercial credit bureau to study when lenders adopt voluntary information sharing technology and the resulting consequences for competition and credit access. Our results suggest that lenders trade off access to new markets against heightened competition for their own borrowers. Lenders that do not share initially lose borrowers to competitors that share, which ultimately compels them to share and leads to the formation of an information sharing system. We find access to credit improves but only for high-quality borrowers in markets with greater lender adoption. Our results offer the first direct evidence on when financial intermediaries adopt information sharing technologies and how sharing systems form and evolve.

Suggested Citation

  • José Liberti & Jason Sturgess & Andrew Sutherland, 2021. "How Voluntary Information Sharing Systems Form: Evidence from a U.S. Commercial Credit Bureau," Working Papers 927, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:927
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    3. Charoenwong, Ben & Kowaleski, Zachary T. & Kwan, Alan & Sutherland, Andrew G., 2024. "RegTech: Technology-driven compliance and its effects on profitability, operations, and market structure," Journal of Financial Economics, Elsevier, vol. 154(C).
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    5. Ben Lourie & N. Bugra Ozel & Alexander Nekrasov & Chenqi Zhu, 2024. "Consensus credit ratings: a view from banks," Review of Accounting Studies, Springer, vol. 29(3), pages 2391-2436, September.

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    More about this item

    Keywords

    information sharing; access to credit; financial intermediation; fintech; SMEs.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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