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An intellectual property-based approach to the mandatory disclosure among lenders of credit data for small and medium enterprises

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  • Paolo Siciliani

    (Bank of England)

Abstract

In the United Kingdom as well as Europe there is a lot of momentum behind proposals to mandate the sharing of credit data for small and medium enterprises (SMEs) more widely than is currently the case. Such information sharing would facilitate greater competition among lenders by making it easier for rivals (that is, non-bank ones in particular) to identify and compete for good SME borrowers. However, a trade-off may emerge between good SME borrowers with a credit history and potentially good SME borrowers without one, given that lenders’ ability to offer low rates to untested borrowers is curtailed by the prospect of rivals’ poaching once their creditworthiness is revealed. Hence, in order to maximise the benefits of information sharing, a time-limited exemption for new SME borrowers is proposed to ensure that lenders’ incentives are not skewed against them.

Suggested Citation

  • Paolo Siciliani, 2016. "An intellectual property-based approach to the mandatory disclosure among lenders of credit data for small and medium enterprises," Journal of Banking Regulation, Palgrave Macmillan, vol. 17(4), pages 288-295, November.
    • Handle: RePEc:pal:jbkreg:v:17:y:2016:i:4:d:10.1057_jbr.2015.25
    DOI: 10.1057/jbr.2015.25
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    References listed on IDEAS

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