Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209969 
Year of Publication: 
2010
Series/Report no.: 
Working Paper No. 2010/24
Publisher: 
Norges Bank, Oslo
Abstract: 
Since information asymmetries have been identified as an important source of bank profits, it may seem that the establishment of information sharing (e.g., introducing credit bureaus or public registers) will lead to lower investment in acquiring information. However, banks base their decisions on both hard and soft information, and it is only the former type of data that can be communicated credibly. We show that when hard information is shared, banks will invest more in soft information. These will produce more accurate lending decisions, provide higher welfare, lead to an increased focus on relationship banking and favor informationally opaque borrowers. We test our theory using a large sample of firm-level data from 24 countries.
Subjects: 
bank competition
information sharing
relationship bank
hard
soft
JEL: 
G21
L13
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-581-6
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
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