Does credit reporting lead to a decline in relationship lending? Evidence from information sharing technology
Name
jmp ssrn.pdf
Description
Accepted version
Size
548.47 KB
Format
Adobe PDF
Checksum (MD5)
c7eabe57ff9db635a391a80cb86b5e0c
Author(s)
Sutherland, Andrew Gordon
Date Issued
August 2018
Journal
Journal of Accounting and Economics
Publisher
Elsevier BV
Citation
Sutherland, Andrew et al. "Does credit reporting lead to a decline in relationship lending? Evidence from information sharing technology." Journal of Accounting and Economics 66, 1 (August 2018): 123-141 © 2018 Elsevier
Version
Author's final manuscript
Abstract
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. Keywords: Debt contracts; Information sharing; Information asymmetries; Hard and soft information; Credit bureaus; Relationship lending; Transactional lending; Information economics; Entrepreneurial finance; Credit reports; Credit scores; FinTech
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/j.jacceco.2018.03.002
