Bank Loan Behavior and Credit Information Sharing: An Insight from Measurement Costs

Xuehui He and Yiming Wang

Journal of Economic Policy Reform, 2007, vol. 10, issue 4, 325-333

Abstract: We find that the measurement cost of creditworthiness is important when considering the behavior of banks. A set of credit infrastructures, i.e. a credit rating system, will help to increase the incentive of the banks to make unsecured credit loans, and thus help financial development. However, since the credit information sharing system is a kind of ‘public good’, it will not come into being endogenously in most cases without the driving force of the government.

Date: 2007
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DOI: 10.1080/17487870701554315

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