Creditor information registries and relationship lending

Jérémie Bertrand and Paul-Olivier Klein

International Review of Law and Economics, 2021, vol. 65, issue C

Abstract: Banks rely on information to assess the creditworthiness of borrowers. They can secure this information in two ways: on the one hand, they can access public information on the firm from credit databases. On the other hand, they can build a relationship with the firm and secure private, more precise, information on the firm’s prospects. In this paper, we investigate what happens to the collection of private information, when banks have access to a broader scope of public information. We argue that banks can either focus on public information and reduce their collection of private information (which is costly), or see the collection of private information as strategic, giving them an advantage when allocating credit.

Keywords: Creditor information; Relationship lending; Information asymmetries (search for similar items in EconPapers)
JEL-codes: G21 L13 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:65:y:2021:i:c:s0144818820301794

DOI: 10.1016/j.irle.2020.105966

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