Information Sharing and Cross-Border Entry in European Banking

Abstract

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Information asymmetries can severely limit cross-border border expansion of banks. When a bank enters a new market, it has incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients. We investigate the interaction of credit registers and bank entry modes (in form of branching and M&A) by using a new set of time series cross-section data for the EU-27 countries. We study how the presence of public and private credit registers and the type of information exchanged affect bank entry modes during the period 1990-2007. Our analysis shows that the existence of both types of registers increases the share of branching in the overall entries. Additionally, the establishment of public registers reduces concentration ratios, and some banking competition indicators (such as overhead costs/assets). The introduction of a private credit bureau, on the other hand, has no effect on concentration ratios, but positively contributes to competition (by decreasing interest rate margins). This suggests that credit registers facilitate direct entry through a reduction of information asymmetries, which in turn intensifies competition.

Regulatory Arbitrage and Cross‐Border Bank Acquisitions

“…In addition, though the United States represents an overwhelmingly popular target market for cross‐border deals, our findings on flows in the direction of regulatory arbitrage remain when we exclude U.S. banks as targets or acquirers. Finally, we test the robustness of our results to the inclusion of controls for the quality of information sharing in the target country, which has been shown to affect cross‐border bank entry (Bouckaert and Degryse (), Giannetti, Jentzsch, and Spagnolo ()). Our results continue to go through.…”

Not-So-Big and Big Credit Data Between Traditional Consumer Finance, FinTechs, and the Banking Union: Old and New Challenges in an Enduring EU Policy and Legal Conundrum

“…In addition to competitive disadvantages in relation to incurring greater risks of incorrectly estimating a borrower's credit risk, without relevant information on borrowers new market entrants would be likely to attract precisely those who were rejected by existing lenders in the market. 21 This circumstance has induced recent literature to conclude that information sharing, market structure, and competitive conduct are intrinsically intertwined in the financial services market and, from the standpoint of industrial organisation, the availability of information shared by the sector can affect foreign lenders' choice not only of whether to entry another jurisdiction but also the mode of doing it, i. e. whether through the cross-border provision of services, the setting-up of branches or subsidiaries, or through mergers and acquisitions. 22 Therefore, on the one hand such strategies may well have the potential to influence the intensity of competition in national markets and among national providers.…”

Building New Plants or Entering by Acquisition? Estimation of an Entry Model for U.S. Cement Industry

“…5 1 For example, in a recent paper about the banking industry, Giannetti et al (2010) found that the green…eld/merger entry decision by banks in European countries is a¤ected by the type of credit register (private or public) in every country. This di¤erence a¤ects essentially the entry barriers to green…eld entry (or creates a di¤erent "demand de…cit" as found by Foster et al (2010)) that my model is taking into account.…”