Economics of Voluntary Information Sharing

Jose Liberti, Jason Sturgess and Andrew Sutherland

MPRA Paper from University Library of Munich, Germany

Abstract: We show that lenders join a U.S. commercial credit bureau when information asymmetries between incumbents and entrants create an adverse selection problem that hinders market entry. Lenders also delay joining when information asymmetries protect them from competition in existing markets, consistent with lenders trading off new market entry against heightened competition. We exploit shocks to information coverage to show that lenders enter new markets after joining the bureau in a pattern consistent with this trade-off. Our results illuminate why intermediaries voluntarily share information and show how financial technology that mitigates information asymmetries can shape the boundaries of lending.

Keywords: information sharing; adverse selection; specialization; financial intermediation; collateral; credit bureaus; fintech (search for similar items in EconPapers)
JEL-codes: D43 D82 G21 G23 G32 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ban, nep-big and nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Economics of Voluntary Information Sharing (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93673

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