Working Paper: CEPR ID: DP2184
Authors: Tullio Jappelli; Marco Pagano
Abstract: Theory predicts that information sharing among lenders attenuates adverse selection and moral hazard, and can therefore increase lending and reduce default rates. To test these predictions, we construct a new international data set on private credit bureaus and public credit registers. We find that bank lending is higher and proxies for default rates are lower in countries where lenders share information, regardless of the private or public nature of the information sharing mechanism. We also find that public intervention is more likely where private arrangements have not arisen spontaneously and creditor rights are poorly protected.
Keywords: Information Sharing; Credit Market; Default Rate
JEL Codes: D82; G21; G28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Information sharing among lenders (G21) | Credit market performance (E44) |
| Information sharing among lenders (G21) | Bank lending (G21) |
| Information sharing among lenders (G21) | Proxies for default rates (E43) |
| Public credit registers and private credit bureaus serve as substitutes (G21) | Establishment of public credit registers (G21) |