Economics of Voluntary Information Sharing

55 Pages Posted: 14 Nov 2017 Last revised: 21 Apr 2020

See all articles by Jose Maria Liberti

Jose Maria Liberti

Northwestern University - Kellogg School of Management; DePaul University

Jason Sturgess

Queen Mary University of London

Andrew Sutherland

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: August 31, 2018

Abstract

We examine how developments in financial technology that improve information sharing affect lender specialization. Using the introduction of a U.S. commercial credit bureau, we document that lenders leverage their collateral expertise to enter new markets after joining. We exploit the staggered joining of members to show that a member lender’s exposure responds to information shared by new lenders entering the bureau but only when the newly shared information is related to the lender’s own specialization. Small lenders account for most of geographic expansion, while large lenders increase their exposure to small firms. Our results help explain why intermediaries regularly forego rents when voluntarily sharing information and show how financial technology that mitigates information asymmetries can shape the boundaries of lending.

Keywords: information sharing, fintech, specialization, financial intermediation, collateral, credit bureaus, credit scores

JEL Classification: G21, G32

Suggested Citation

Liberti, Jose Maria and Sturgess, Jason and Sutherland, Andrew, Economics of Voluntary Information Sharing (August 31, 2018). Available at SSRN: https://ssrn.com/abstract=3068461 or http://dx.doi.org/10.2139/ssrn.3068461

Jose Maria Liberti (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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HOME PAGE: http://www.kellogg.northwestern.edu/faculty/directory/liberti_jose.aspx

DePaul University ( email )

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Jason Sturgess

Queen Mary University of London ( email )

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Mile End Road
London, London E1 4NS
United Kingdom

Andrew Sutherland

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street

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