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Information Sharing in a Competitive Microcredit Market

J. Bos, Ralph De Haas () and Matteo Millone

No 14464, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze contract-level data on approved and rejected microloans to assess the impact of a new credit registry in Bosnia and Herzegovina, a country with a competitive microcredit market. Our findings are threefold. First, information sharing reduces defaults, especially among new borrowers, and increases the return on lending. Second, lending tightens at the extensive margin as loan officers, using the new registry, reject more applications. Third, lending also tightens at the intensive margin: microloans become smaller, shorter and more expensive. This affects both new borrowers and lending relationships established before the registry. In contrast, repeat borrowers whose lending relationship started after the registry introduction begin to benefit from larger loans at lower interest rates.

Keywords: Credit registry; information sharing; microcredit; overborrowing (search for similar items in EconPapers)
JEL-codes: D04 D82 G21 G28 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-mfd
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