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The Effects of Creditor Rights and Bank Information Sharing on Borrower Behavior: Theory and Evidence

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Listed:
  • Boyd, John
  • Hakenes, Hendrik
  • Heitz, Amanda

Abstract

This paper provides a comprehensive theoretical and empirical analysis of “creditor rights” and “information sharing” throughout over 1.8 million private firms in Europe. We show that many of the outcomes associated with greater levels of creditor rights can be obtained with higher information sharing between banks. Both theory and empirics show that creditor rights and information sharing are associated with greater firm leverage, lower profitability, and greater distance to default. Moreover, theory and empirics find that creditor rights and information sharing are robust substitutes. Our analysis suggests that poor creditor rights can be substituted by improved information sharing.

Suggested Citation

  • Boyd, John & Hakenes, Hendrik & Heitz, Amanda, 2018. "The Effects of Creditor Rights and Bank Information Sharing on Borrower Behavior: Theory and Evidence," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181565, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc18:181565
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    File URL: https://www.econstor.eu/bitstream/10419/181565/1/VfS-2018-pid-13417.pdf
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    More about this item

    Keywords

    Creditor rights; information sharing.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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