The Impact of Information Sharing on the Use of Collateral versus Guarantees

Ralph De Haas and Matteo Millone

The World Bank Economic Review, 2020, vol. 34, issue Supplement_1, S14-S19

Abstract: This study exploits contract-level data from Bosnia and Herzegovina to assess the impact of a new credit registry on the use of borrower collateral versus third-party guarantees. Among first-time borrowers, the introduction of mandatory information sharing leads to a shift from collateral to guarantees, in particular for riskier borrowers. Among repeat borrowers, both collateral and guarantee requirements decline in proportion to the length of the lending relationship. These results suggest that information sharing can both reduce adverse selection among new borrowers and hold-up problems among repeat borrowers.

Keywords: information sharing; collateral; guarantees (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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