Consumer Bankruptcy and Information

Jason Allen, Evren Damar and David Martinez-Miera

Staff Working Papers from Bank of Canada

Abstract: We analyze the relationship between the intensity of banks’ use of soft-information and household bankruptcy patterns. Using a unique data set on the universe of Canadian household bankruptcies, we document that bankruptcy rates are higher in markets where the collection of soft, or qualitative locally gathered information, is the weakest. Using two Canadian bank mergers as exogenous variation in local market structure, we show that the differences in bankruptcy rates are not due to changes in the supply of credit. Our findings indicate that screening via hard-information is not a perfect substitute for soft-information. Instead, the two appear to be complements.

Keywords: Financial institutions; Financial services (search for similar items in EconPapers)
JEL-codes: D4 G2 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012
New Economics Papers: this item is included in nep-ban and nep-cba
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Consumer Bankruptcy, Bank Mergers, and Information (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:12-18

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