Bank Competition, Concentration, and Credit Reporting
This paper explores the empirical relationship between bank competition, bank concentration, and the emergence of credit reporting institutions. The authors find that countries with lower entry barriers into the banking market (that is, a greater t...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/05/17705268/bank-competition-concentration-credit-reporting http://hdl.handle.net/10986/15583 |
| Summary: | This paper explores the empirical
relationship between bank competition, bank concentration,
and the emergence of credit reporting institutions. The
authors find that countries with lower entry barriers into
the banking market (that is, a greater threat of
competition) are less likely to have a credit bureau,
presumably because banks are less willing to share
proprietary information when the threat of market entry is
high. In addition, a credit bureau is significantly less
likely to emerge in economies characterized by a high degree
of bank concentration. The authors argue that the reason for
this finding is that large banks stand to lose more monopoly
rents from sharing their extensive information with smaller
players. In contrast, the data show no significant
relationship between bank competition or concentration and
the emergence of a public credit registry, where banks'
participation is mandatory. The results highlight that
policies designed to promote the voluntary creation of a
credit bureau need to take into account banks'
incentives to extract monopoly rents from proprietary credit information. |
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