Entry and Strategic Information Display in Credit Markets

19 Pages Posted: 11 Jul 2006

See all articles by Hans Degryse

Hans Degryse

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

Jan Bouckaert

University of Antwerp - Department of Economics

Abstract

In many countries, lenders voluntarily provide information about their borrowers to private credit registries. A recent World Bank survey reveals that the display of a lender's own borrower information is often not reciprocated. That is, access to these registries does not require the prior provision of proprietary data. We argue that incumbent lenders release information about a portion of their profitable borrowers for strategic reasons. The reasoning is that the pool of unreleased borrowers becomes characterised by a severe adverse selection problem. This prevents the entrants from bidding for all the incumbent's profitable borrowers and reduces their scale of entry.

Suggested Citation

Degryse, Hans and Bouckaert, Jan, Entry and Strategic Information Display in Credit Markets. Economic Journal, Vol. 116, No. 513, pp. 702-720, July 2006. Available at SSRN: https://ssrn.com/abstract=916588 or http://dx.doi.org/10.1111/j.1468-0297.2006.01107.x

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

Jan Bouckaert (Contact Author)

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32 3 220 4055 (Phone)

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