Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries?

Samuel Guérineau () and Florian Leon
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Samuel Guérineau: CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper analyses the impact of credit information sharing on financial stability, drawing special attention to its interactions with credit booms. A probit estimation of financial vulnerability episodes-identified by jumps in the ratio of non-performing loans to total loans-is run for a sample of 159 countries divided into two sub-samples according to their level of development: 80 advanced or emerging economies and 79 less developed countries. The results show that: i) credit information sharing reduces financial fragility for both groups of countries; ii) for less developed countries, the main effect is the direct effect (reduction of NPL ratio once credit boom is controlled), suggesting a portfolio quality effect; iii) credit information sharing also mitigates the detrimental impact of a credit boom on financial fragility but this result holds only for advanced and emerging countries and for household credit booms; and iv) the depth of information sharing has a negative impact on the likelihood of credit booms (but not the coverage of IS).

Date: 2018-08
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Published in Journal of Financial Stability, 2018, ⟨10.1016/j.jfs.2018.08.004⟩

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Journal Article: Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02009188

DOI: 10.1016/j.jfs.2018.08.004

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