Does Competition for Novice Borrowers Hurt Access to Finance? An Analysis in a Context of High Risk and Low Outreach
Veronica Balzarotti () and
Alejandra Anastasi ()
Additional contact information
Alejandra Anastasi: Central Bank of Argentina
No 201562, BCRA Working Paper Series from Central Bank of Argentina, Economic Research Department
The lack of access to financial services and to credit in particular is an issue in many developing countries. This paper studies the channels through which new borrowers get access to consumer loans and the effect of repayment data distribution both on that access and on subsequent bank switching by borrowers. We represent such dynamics with a simple model that incorporates different types of lenders and heterogeneity among individuals. The model assumptions are validated against data from the Argentinean banking system. The model yields a set of results that are characteristic of emerging markets: a significant share of the population is excluded from credit, including those who self-exclude, and lender type determines different lending conditions. Additionally, the model shows that distributing loan repayment data, by boosting competition for novice borrowers, may increase the share of the population with no access to credit. Following these findings, we advise focusing on improving available information for unbanked individuals, rather than expanding such information for individuals with a loan payment track record.
Keywords: asymmetric information; bank competition; consumer credit; credit access; credit bureau; emerging markets; financial inclusion; information dissemination; poaching (search for similar items in EconPapers)
JEL-codes: D43 D82 D83 G14 G21 G23 G28 G29 (search for similar items in EconPapers)
Pages: 37 pages
New Economics Papers: this item is included in nep-ban and nep-mfd
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.bcra.gov.ar/pdfs/investigaciones/62_WP_2014.pdf English version (application/pdf)
Journal Article: Does Competition for Novice Borrowers Hurt Access to Finance? An Analysis in a Context of High Risk and Low Outreach (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bcr:wpaper:201562
Access Statistics for this paper
More papers in BCRA Working Paper Series from Central Bank of Argentina, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Federico Grillo ().