Sharing Default Information as a Borrower Discipline Device.

Creditors often share information about their customers' credit record. Besides helping them to spot bad risks, this informational exchange acts as a disciplinary device. If creditors are known to exchange data about defaults, borrowers must consider that default on a current lender would disrupt their credit rating with all the other lenders. This raises their incentive to perform.

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Year of publication:	1996
Authors:	Padilla, A.J. ; Pagano, M.
Institutions:	Industry Studies Program (ISP), Department of Economics
Subject:	INFORMATION \| FINANCIAL MARKET

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Series:	Boston University - Industry Studies Programme.
Type of publication:	Book / Working Paper
Notes:	26 pages
Classification:	D80 - Information and Uncertainty. General ; D82 - Asymmetric and Private Information ; G20 - Financial Institutions and Services. General ; G21 - Banks; Other Depository Institutions; Mortgages
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005486732