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Information Sharing in Banking: A Collusive Device?

Thomas Gehrig and Rune Stenbacka
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Rune Stenbacka: Swedish School of Economics

No 1837, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We show that information sharing among banks may serve as a collusive device. An informational sharing agreement is an a-priori commitment to reduce informational asymmetry between banks in future lending. Hence, information sharing agreements tend to increase the intensity of competition in future periods and, thus, reduce the value of informational rents in current competition. We contribute to the existing literature by emphasizing that a reduction in informational rents will also reduce the intensity of competition in the current period, thereby reducing competitive pressure in current credit markets. We provide a large class of economic environments, where a ban on information sharing is strictly preferred by society.

Date: 2000-08-01
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Citations: View citations in EconPapers (6)

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