Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210434 
Year of Publication: 
2018
Series/Report no.: 
Working Paper No. 869
Publisher: 
Queen Mary University of London, School of Economics and Finance, London
Abstract: 
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.
Subjects: 
information sharing
adverse selection
specialization
financial intermediation
collateral
credit bureaus
fintech
JEL: 
G21
G32
Document Type: 
Working Paper

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