Abstract
This study exploits contract-level data from Bosnia and Herzegovina to assess the impact of a new credit registry on the use of borrower collateral versus third-party guarantees. Among first-time borrowers, the introduction of mandatory information sharing leads to a shift from collateral to guarantees, in particular for riskier borrowers. Among repeat borrowers, both collateral and guarantee requirements decline in proportion to the length of the lending relationship. These results suggest that information sharing can both reduce adverse selection among new borrowers and hold-up problems among repeat borrowers.
| Original language | English |
|---|---|
| Pages (from-to) | S14-S19 |
| Number of pages | 6 |
| Journal | World Bank Economic Review |
| Volume | 34 |
| Issue number | Issue Supplement _1 |
| Early online date | 3 Dec 2019 |
| DOIs | |
| Publication status | Published - 1 Feb 2020 |
Funding
Ralph De Haas (corresponding author) is the Director of Research at the European Bank for Reconstruction and Development (EBRD) and a Associate Professor at Tilburg University; his email address is [email protected]; Matteo Millone is an Assistant Professor at the VU University Amsterdam; his email address is [email protected]. The authors thank Borislav Petric and Igor Duspara for their kind help with accessing EKI data. The views expressed are those of the authors and not necessarily of the EBRD. Financial support from the Bocconi Centre for Applied Research in Finance (Baffi CAREFIN) is gratefully acknowledged.
Keywords
- collateral
- guarantees
- information sharing
