Informational synergies in consumer credit

Martin Hibbeln, Lars Norden, Piet Usselmann and Marc Gürtler

Journal of Financial Intermediation, 2020, vol. 44, issue C

Abstract: We investigate whether lenders can realize informational synergies by simultaneously obtaining private information from different accounts of the same borrower. Synergies exist if such information is complementary to each other. We focus on consumer credit, using 3.5 million observations from checking accounts and credit card accounts of the same individuals during 2007–2014. First, activity from both accounts is complementary for estimating consumer default beyond credit scores, borrower characteristics and relationship characteristics. Checking accounts display warning indications about consumer default earlier and more accurately than credit card accounts. Second, decision errors are lower when lenders consider cross-product information. The evidence suggests significant informational synergies that are important for the supply and allocation of credit.

Keywords: Household finance; Credit risk; Asymmetric information; Account activity; Consumer bankruptcy (search for similar items in EconPapers)
JEL-codes: D12 D14 G20 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042957319300476
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:44:y:2020:i:c:s1042957319300476

DOI: 10.1016/j.jfi.2019.100831

Access Statistics for this article

Journal of Financial Intermediation is currently edited by Elu von Thadden

More articles in Journal of Financial Intermediation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().