Creditor rights, information sharing, and bank risk taking

Technology-driven information sharing and conditional financial development in Africa

“…The latter has principally been concerned with the influence of stronger creditors' rights in, inter alia: (i) bank risk-taking by Houston et al (2010) and Acharya et al (2011); (ii) bankruptcy with notable works from Claessens and Klapper (2005), Djankov et al (2007) and Brockman and Unlu (2009) and (iii) capital structure by El Ghoul et al (2012). The former strand has been concerned with assessing how reducing information asymmetry: enhances the availability of credit (Djankov et al, 2007;Brown et al, 2009;Triki & Gajigo, 2014); reduces defaulting rates (Jappelli & Pagano, 2002); decreases the cost of credit (Brown et al, 2009); affects antitrust intervention (Coccorese, 2012); influences corrupt lending (Barth et al, 2009) and affects bank loans that are syndicated (Ivashina, 2009;Tanjung et al, 2010).…”

“…Second, on the measurement of financial development, it is interesting to note that the broad and African-specific literature on information asymmetry (Ivashina, 2009;Tanjung et al, 2010;Houston et al, 2010) and information sharing have specifically been oriented towards the measurement of constraints in access to finance. We steer clear of the mainstream literature by employing all financial dimensions documented by the Financial Development and Structure Database of the World Bank.…”

The Role of Comprehensive Information Sharing in Credit Market: Theoretical Analysis and New Evidence from the European Union

“…As reflected by Figure 1, there still exist contradictions between the cross-country evidence by Jappelli and Pagano (2002), Houston et al (2010), and Büyükkarabacak and Valev (2012) and theoretical predictions by Brown et al (2009) and Jappelli and Pagano (2005). A potential explanation is that most researchers only compare the differences between countries which have established information sharing system and those which have not, while ignoring the development stages of the system.…”

“…Theoretical research: Pagano and Jappelli (1993); Padilla and Pagano (1997;2000); Vercammen (1995) Empirical research: Behr and Sonnekalb (2012); Dierkes et al (2013) Houston et al (2010); Jappelli and Pagano (2002) Information sharing produces the negative "composition effects", leaving the credit risk increase: Brown et al (2009);Jappelli and Pagano (2005); Dell'Ariccia and Marquez (2006) "information rents" once the lending relationship is established. This leads to the "hold-up" problem (borrowers will be charged high interest rate, which reduces their effort to perform and increases the default) as well as moral hazard.…”

“…Still, there remain wide discrepancies about the role of information sharing in reducing the aggregate credit risk level. Jappelli and Pagano (2002), Houston, C. Lin, P. Lin, and Ma (2010), and Büyükkarabacak and Valev (2012) highlighted that information sharing reduces one country's credit risk and probabilities of bank crisis. However, there still exists controversy on this point of view.…”