We show that lenders join a U.S. commercial credit bureau when information asymmetries between incumbents and entrants … create an adverse selection problem that hinders market entry. Lenders also delay joining when information asymmetries … competition. We exploit shocks to information coverage to show that lenders enter new markets after joining the bureau in a …

relatively smaller information advantage face higher collateral requirements, and that technological innovations that narrow the … information advantage of local lenders, such as small business credit scoring, lead to a greater use of collateral in lending …We consider an imperfectly competitive loan market in which a local relationship lender has an information advantage …

We offer a new test of the ex ante theory of collateral. Theory states that lenders rely less on collateral if they … have better information about borrowers. We test this by contrasting the use of collateral between formal and – better … than informal lenders, controlling for conventional determinants of collateral. Moreover, having better information about …

The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank …-firm relationship and show that the bank's decision to liquidate bad firms has two opposing effects. First, the bank gets a payoff if a …

We study specialized lending in a credit market competition model with private information. Two banks, equipped with … similar data processing systems, possess "general" signals regarding the borrower's quality. However, the specialized bank … based on its specialized signal conditional on making a loan. This private-information-based pricing helps deliver the …

resulting from the information asymmetry. Furthermore, we extend the set of possible collateral to property rights over physical … and non physical assets, and explain how a superior lender's information can work as collateral. …Credit rationing and the use of collateral are widely observed in debt financing. To our view there is yet no …

We explore Lithuanian credit register data and two bank closures to provide a novel estimate of firms' bank …-switching costs and a novel identification of the hold-up problem. We show that when a distressed bank's closure forced firms to … more, which suggests that information asymmetries significantly contribute to switching costs. In line with banks …

This paper empirically examines the role of soft information in the competitive interaction between relationship and … transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a … relationship bank, but not to a transaction bank. We show that borrowers self-select to relationship banks depending on whether …

We establish that a monopoly bank never uses collateral as a screening device. A pooling equilibrium always exists in … which all borrowers pay the same interest rate and put zero collateral. Absence of screening leads to socially inefficient …

We explore whether behavioral biases impede the effective processing and interpretation of soft information in private …) common identity. Specifically, we find that using soft information in lending decisions leads to worse loan quality when loan … information in lending decisions …