Information Sharing and Cross-Border Entry in European Banking

ECRI Research Report No. 11

52 Pages Posted: 8 Feb 2012

See all articles by Caterina Giannetti

Caterina Giannetti

University of Jena; University of Bologna - Department of Economics

Nicola Jentzsch

DIW Berlin

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Multiple version iconThere are 3 versions of this paper

Date Written: February 22, 2010

Abstract

Information asymmetries can severely limit the cross-border border expansion of banks, if entering banks can only obtain incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients.

This ECRI research report investigates the interaction of credit registers and bank entry modes (in the form of branching as well as mergers and acquisitions) by using a new set of time-series cross-section data for the EU-27 countries. We study how the presence of public and private credit registers and the kind of information exchanged affected the modes of bank entries during the period 1990-2007. Our analysis shows that the existence of both types of registers increases the share of branching among the overall bank entries. Additionally, the establishment of public registers reduces concentration ratios and some banking competition indicators (such as overhead costs/assets). The introduction of a private credit bureau, on the other hand, has no effect on concentration ratios, but positively contributes to competition (by cutting interest rate margins). These findings suggest that credit registers facilitate the direct entry of banks through a reduction of information asymmetries, which in turn intensifies competition.

Keywords: information sharing, cross-border expansion, banks, credit registers, bank entry modes, credit registers

Suggested Citation

Giannetti, Caterina and Jentzsch, Nicola and Spagnolo, Giancarlo, Information Sharing and Cross-Border Entry in European Banking (February 22, 2010). ECRI Research Report No. 11, Available at SSRN: https://ssrn.com/abstract=2001402 or http://dx.doi.org/10.2139/ssrn.2001402

Caterina Giannetti (Contact Author)

University of Jena ( email )

Furstengraben 1
Jena, Thuringa 07743
Germany

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Nicola Jentzsch

DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

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