De Haas, R. and Millone, M. (2020). The Impact of Information Sharing on the Use of Collateral versus Guarantees World Bank Economic Review, 34(Issue Supplement _1):S14--S19.
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Affiliated authorMatteo Millone
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Publication year2020
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JournalWorld Bank Economic Review
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.