Does credit reporting lead to a decline in relationship lending? Evidence from information sharing technology

I examine how credit reporting affects where firms access credit and how lenders contract with them. I use within firm-time and lender-time tests that exploit lenders joining a credit bureau and sharing information in a staggered pattern. I find information sharing reduces relationship-switching costs, particularly for firms that are young, small, or have had no defaults. After sharing, lenders transition away from relationship contracting, in two ways: contract maturities in new relationships are shorter, and lenders are less willing to provide financing to their delinquent borrowers. My results highlight the mixed effects of transparency-improving financial technologies on credit availability.

• Publication year

  2018

• Venue

  Journal of Accounting & Economics

• Publication date

  2018-03-11

• Fields of study

  Business, Economics

• Identifiers
  DOI 10.1016/J.JACCECO.2018.03.002
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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