Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality
Review of Quantitative Finance and Accounting, 2019
56 Pages Posted: 23 Jan 2020
Date Written: 2019
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.
Keywords: Credit information sharing, Developing countries, Banking market concentration, Governance quality
JEL Classification: G14, G21, G38
Suggested Citation: Suggested Citation