How Voluntary Information Sharing Systems Form: Evidence from a U.S. Commercial Credit Bureau
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Accepted version
Embargoed until: 2024-07-21
Embargoed until: 2024-07-21
Publisher
Journal
Journal of Financial Economics
ISSN
0304-405X
Metadata
Show full item recordAbstract
We use the introduction of a U.S. commercial credit bureau to study when lenders adopt voluntary information sharing technology and the resulting consequences for competition and credit access. Our results suggest that lenders trade off access to new markets against heightened competition for their own borrowers. Lenders that initially do not adopt lose borrowers to competitors that do, which ultimately compels them to adopt and leads to the formation of an information sharing system. Access to credit improves but only for high-quality borrowers in markets with greater lender adoption. We provide the first direct evidence on when financial intermediaries adopt information sharing technologies and how sharing systems form and evolve.
Authors
Sturgess, JCollections
- Economics and Finance [370]