Economic Information and Finance: More Information Means More Credit, Fewer Bad Loans, and Less Corruption

Abstract

This paper builds on recent work that shows how financial sector outcomes are affected by the provision of information by financial and other entities. In particular, it shows that an indicator of economic transparency is positively related to higher levels of private credit and a lower share of nonperforming loans even after accounting for factors commonly believed to influence financial sector development in cross-country empirical estimation. Timely access to economic data allows investors to make better decisions on investments and to better monitor banks' financial health. Greater economic transparency raises accountability and lowers corruption in bank lending.

Keywords: Banks & Banking Reform, Financial Intermediation, Economic Theory & Research, Insurance & Risk Mitigation, Investment and Investment Climate