Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry

European Banking Center Discussion Paper No. 2010-07S

CentER Discussion Paper Series No. 2010-34S

47 Pages Posted: 7 Apr 2010

See all articles by Xiaoqiang Cheng

Xiaoqiang Cheng

Hong Kong Monetary Authority

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)

Date Written: February 19, 2010

Abstract

We provide the first evidence on how the introduction of information sharing via a public credit registry affects banks’ lending decisions. We employ a unique dataset containing detailed information on credit card applications and decisions from one of the leading banks in China. While we do not find that information sharing decreases credit rationing on average, the distribution of granted credit among borrowers with shared information has a unique pattern. In particular, compared to those with information reported only by this bank, borrowers with extra information shared by other banks receive higher credit card lines. While positive information shared by other banks augments lending of this bank, the effect of negative information shared by other banks is not significant. In addition, the availability of shared information through the Public Registry has mixed effects on how the bank utilizes internally produced information. Last, information sharing alleviates informational barriers in China’s credit card market, but not completely.

Keywords: information sharing, credit availability, credit rationing, credit card

JEL Classification: G21, G32

Suggested Citation

Cheng, Xiaoqiang and Degryse, Hans, Information Sharing and Credit Rationing: Evidence from the Introduction of a Public Credit Registry (February 19, 2010). CentER Discussion Paper Series No. 2010-34S. Available at SSRN: https://ssrn.com/abstract=1585140 or http://dx.doi.org/10.2139/ssrn.1585140

Xiaoqiang Cheng (Contact Author)

Hong Kong Monetary Authority ( email )

3 Garden Road, 30th Floor
Hong Kong
Hong Kong

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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