Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality

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JournalReview of Quantitative Finance and Accounting
DateAccepted/In press - 2 Aug 2019
DateE-pub ahead of print (current) - 9 Aug 2019
Early online date9/08/19
Original languageEnglish

Abstract

Departing from the existing literature, which associates credit information sharing with improved access to credit in advanced economies, we examine whether credit information sharing can also reduce loan default rate for banks domiciled in developing countries. Using a large dataset covering 879 unique banks from 87 developing countries from every continent, over a nine-year period (i.e., over 6,300 observations), we uncover three new findings. First, we find that credit information sharing reduces loan default rate. Second, we show that the relationship between credit information sharing and loan default rate is conditional on banking market concentration. Third, our findings suggest that governance quality at the country level does not have a strong moderating role on the effect of credit information sharing on loan default rate.

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© 2019 Springer Nature Switzerland AG. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

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