Public Information and Coordination: Evidence from a Credit Registry Expansion

Hertzberg, Andrew; Liberti, José María; Paravisini, Daniel

doi:10.1111/j.1540-6261.2010.01637.x

Cited by 166 publications

(92 citation statements)

References 65 publications

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“…In addition, when the extra positive information of a borrower is shared to the bank, the extra negative information is not important anymore. We do not find evidence for the "publicity multiplier" of information as documented by Hertzberg et al (2008) for Argentina; however, we find that the bank lowers its credit card supply to borrowers who carry greater credit card balances at other banks. Our results thus are in line with Bennardo et al (2009) where multiple lending relationships induce banks to ration credit, for fear that the borrower's total exposure may become so large as to induce default; however, when banks share information about their seniority or/and about their loan sizes, lending becomes safer, and credit rationing is reduced.…”

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confidence: 45%

“…2 Others find that private credit bureaus, rather than public credit registries, are associated with lower perceived financing constraints and a higher share of bank financing (Love and Mylenko (2003)), or that the lowering of reporting thresholds of a public credit registry results in lower lending to firms that had multiple lending relationships (Hertzberg et. al (2008)).…”

Section: Introductionmentioning

confidence: 99%

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Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry

Cheng¹,

Degryse

2010

SSRN Journal

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We provide the first evidence on how the introduction of information sharing via a public credit registry affects banks' lending decisions. We employ a unique dataset containing detailed information on credit card applications and decisions from one of the leading banks in China. While we do not find that information sharing decreases credit rationing on average, the distribution of granted credit among borrowers with shared information has a unique pattern. In particular, compared to those with information reported only by this bank, borrowers with extra information shared by other banks receive higher credit card lines. While positive information shared by other banks augments lending of this bank, the effect of negative information shared by other banks is not significant. In addition, the availability of shared information through the Public Registry has mixed effects on how the bank utilizes internally produced information. Last, information sharing alleviates informational barriers in China's credit card market, but not completely.

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confidence: 45%

Section: Introductionmentioning

confidence: 99%

Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry

Cheng¹,

Degryse

2010

SSRN Journal

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“…Information sharing is useful if borrower mobility is higher (Pagaon and Jappelli, 1993) and if asymmetric information problems are more important (Brown and Zehnder, 2010). Empirical research has shown that, information sharing is correlated with higher access to credit (Pagaon and Jappelli, 1993), especially in developing countries with inefficient creditor rights (Djankov et al, 2007), but lower lending to low-quality borrowers (Hertzberg et al, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

New Projects Sharing Ratios under Musharakah Financing: A Repeated Game Theoretical Approach Using an Output versus a Proposed Effort Based Contract

Elfakir¹,

Tkiouat²

2015

American Journal of Applied Sciences

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In this research, we provide a game theoretical approach of new projects financed under musharakah contracts using two types of contracts. The first type is effort based. It compensates the agent for the effort provided regardless of market conditions. The other type of contract is output based where the agent compensation is based solely on output realized. Our intuition is, on one hand, that an agent acceptance of an effort based contract signals a higher ability and therefore merits a higher compensation. On the other hand, an agent opting for an output based signals a reliance on market condition and therefore a lower effort ability meriting lower compensation. We found evidence that an effort based contract offer better compensation to the agent in the form of lower sharing ratio to the financier. This result has two important Islamic implications. First it emphasizes the sentiment of altruism which the financier shows by taking a smaller sharing ratio. Second it emphasizes the sentiment of positive reciprocity which the agent exhibits by providing high effort. Another finding is that an effort based contract offers more span of negotiation than an output based contract. This is an important Islamic concept as the agent has fewer restrictions in terms of negotiations. This paper tackle two problems of information assymetries. Namely it tackles adverse selection and moral hazards.

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“…This could happen, for example, if the outside loans facilitate a worthwhile project that the initial creditor could not finance alone (e.g., due to lack of sufficient liquidity as in Detragiache et al (2001) or a too large exposure to the borrower as in Hertzberg et al (2011)). 10 In sharp contrast with H1, an outside loan in this case should increase the initial creditor's willingness to lend and it should increase it more the larger the outside loan.…”

Section: Hypotheses On the Impact Of Non-exclusivity In Financial Conmentioning

confidence: 99%

On the Non-Exclusivity of Loan Contracts: An Empirical Investigation

2012

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Credit contracts are non-exclusive. A string of theoretical papers shows that nonexclusivity generates important negative contractual externalities. Employing a unique dataset, we identify how the contractual externality stemming from the non-exclusivity of credit contracts affects credit supply. In particular, using internal information on a creditor's willingness to lend, we find that a creditor reduces its loan supply when a borrower initiates a loan at another creditor. Consistent with the theoretical literature on contractual externalities, the effect is more pronounced the larger the loans from the other creditor. We also find that the initial creditor's willingness to lend does not change if its existing and future loans retain seniority over the other creditors' loans and are secured with assets whose value is high and stable over time.JEL Classification Numbers: G21, G34, L13, L14.

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Public Information and Coordination: Evidence from a Credit Registry Expansion

Cited by 166 publications

References 65 publications

Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry

Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry

New Projects Sharing Ratios under Musharakah Financing: A Repeated Game Theoretical Approach Using an Output versus a Proposed Effort Based Contract

On the Non-Exclusivity of Loan Contracts: An Empirical Investigation

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