Sharing information in the credit market: Contract-level evidence from U.S. firms

Antonio Doblas-Madrid and Raoul Minetti

Journal of Financial Economics, 2013, vol. 109, issue 1, 198-223

Abstract: We investigate the impact of lenders' information sharing on firms' performance in the credit market using rich contract-level data from a U.S. credit bureau. The staggered entry of lenders into the bureau offers a natural experiment to identify the effect of lenders' improved access to information. Consistent with the predictions of Padilla and Pagano (1997, 2000) and Pagano and Jappelli (1993), we find that information sharing reduces contract delinquencies and defaults, especially when firms are informationally opaque. The results also reveal that information sharing does not reduce the use of guarantees, that is, it may not loosen lending standards.

Keywords: Information asymmetries; Credit contracts; Credit bureaus (search for similar items in EconPapers)
JEL-codes: D82 G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (80)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:109:y:2013:i:1:p:198-223

DOI: 10.1016/j.jfineco.2013.02.007

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