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The Emergence of Information Sharing in Credit Markets

Martin Brown and Christian Zehnder

No 2008-01, Working Papers from Swiss National Bank

Abstract: We examine how asymmetric information and competition in the credit market affect voluntary information sharing between lenders. We study an experimental credit market in which information sharing can help lenders to distinguish good borrowers from bad ones, ecause borrowers may exogenously switch locations. Lenders are, however, engaged in spatial competition, and thus may lose market power by sharing information with competitors. Our results suggest that asymmetric information in the credit market increases the frequency of information sharing between lenders significantly. Competition between lenders reduces information sharing, but the impact of competition seems to be only of second order importance.

Keywords: information sharing; credit; competition; asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 G21 G28 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2008
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The emergence of information sharing in credit markets (2010) Downloads
Working Paper: The Emergence of Information Sharing in Credit Markets (2007) Downloads
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