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Home | Events Archive | Economics of Voluntary Information Sharing in Credit Markets
Seminar

Economics of Voluntary Information Sharing in Credit Markets


  • Series
    TI Finance Research Seminars
  • Speaker
    Jason Sturgess (Queen Mary University of London. United Kingdom)
  • Field
    Finance
  • Location
    Tinbergen Institute, room 1.60
    Amsterdam
  • Date and time

    May 22, 2019
    12:45 - 14:00

We show that lenders join a U.S. commercial credit bureau when information asymmetries between incumbents and entrants create an adverse selection problem that hinders market entry. Lenders also delay joining when information asymmetries protect them from competition in existing markets, consistent with lenders trading off new market entry against heightened competition. We exploit shocks to information coverage to show that lenders enter new markets after joining the bureau in a pattern consistent with this trade-off. Our results illuminate why intermediaries voluntarily share information and show how financial technology that mitigates information asymmetries can shape the boundaries of lending.