Credit information and financial development

Claudio de Moraes (), Gustavo F.S. Duarte and Renan F. Nascimento

International Journal of Finance & Economics, 2022, vol. 27, issue 2, 2182-2193

Abstract: This article evaluates the possible effects of the presence and coverage of credit bureaus over financial development. In order to achieve this objective, this study uses International Monetary Fund aside from World Bank database and standards, more specifically financial development and credit bureau coverage variables. Results indicate a positive impact of credit bureaus over financial development. The potential channel associated with this effect might be related to the information produced by credit bureaus, which implies a reduction in asymmetric information in credit markets, thus, leading to a lower level of risk associated with borrowers and, consequently, reducing the risks faced by banks. With lower levels of uncertainty and risk, banks tend to lend more, improving financial development, which could suggest the adoption of a policy to create or stimulate credit bureaus coverage.

Date: 2022
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https://doi.org/10.1002/ijfe.2267

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