Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80748
Authors: 
Allen, Jason
Damar, H. Evren
Martinez-Miera, David
Year of Publication: 
2012
Series/Report no.: 
Bank of Canada Working Paper 2012-18
Abstract: 
We analyze the relationship between the intensity of banks' use of soft-information and household bankruptcy patterns. Using a unique data set on the universe of Canadian household bankruptcies, we document that bankruptcy rates are higher in markets where the collection of soft, or qualitative locally gathered information, is the weakest. Using two Canadian bank mergers as exogenous variation in local market structure, we show that the differences in bankruptcy rates are not due to changes in the supply of credit. Our findings indicate that screening via hard-information is not a perfect substitute for softinformation. Instead, the two appear to be complements.
Subjects: 
Financial institutions
Financial services
JEL: 
G2
D4
Document Type: 
Working Paper

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