Information Sharing and Information Acquisition in Credit Markets (Karapetyan A., Stacescu B.)

Bank Lending Information Asymmetry and Transparency

Abstract Credit bureaus and public credit registers allow lenders to share information about borrowers. Since information asymmetries have been identified as an important source of bank profits, it may seem that the establishment of such arrangements will lead to lower investment in information acquired through screening and monitoring. However, banks base their decisions on both hard and soft information, and it is only the former type of data that can be communicated via credit bureaus. We show that when hard information is shared, banks are likely to invest more in soft information, whether through initial screening or through monitoring during the life of the loan. This can potentially lead to more accurate lending decisions and favor small, informationally opaque borrowers.
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Libref/ Karapetyan A., Stacescu B. (2008) “Information Sharing and Information Acquisition in Credit Markets”, European Banking Center Discussion Paper No. 2009-07S , pp. 1-72
© Программирование — Александр Красильников, 2008
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