Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries?

Bank stability, credit information sharing and a shift toward households' lending: international evidence

“…Further, Brown et al (2009) argue that the effect on credit levels is confounding, as increased lending to borrowers with a low-risk profile may not compensate for decreased lending to those with a high-risk profile, but in practice, overall the volume of credit granted appears to climb. Following Guérineau and Léon (2019) who suggest that credit information sharing plays a mediation role in the relationship between credit booms and NPLs of banks, we also contend that when the global banking system is shifting towards household lending with a greater level of credit information sharing, this shifting strategy may have an impact on bank stability. Therefore, we investigate the joint effect of credit information sharing and the household-credit shifting on bank stability.…”

“…In a review by Claessens (2015), a combination of macro-prudential policies shows quite efficient in controlling credit expansion along with housing price growth and bank leverage. Gu erineau and L eon (2019) argue that credit information sharing should be considered cautiously, as it has the potential to enhance financial stability. Therefore, this study revisits the relationship between a shift in lending strategy toward households and bank stability while considering the effect of credit information sharing.…”

“…This study contributes to the existing literature in several ways. Few studies attempt to examine the relationship between financial stability, credit information sharing and abnormal loan growth (Soedarmono et al, 2017) or credit booms (Gu erineau and L eon, 2019). The global banking system experienced a significant change in household credit relative to firm credit in recent years.…”

Corporate disclosure and credit market development

“…The significance of nonperforming loans as a share of total gross loans in credit markets is documented in the empirical literature (Ghosh, 2019). Indeed, annual changes in nonperforming loans as a share of total gross loans are seen as "a warning indicator of banking system fragility" (Guérineau & Léon, 2019). We hypothesize the negative effect of nonperforming loans on credit market development in the sense that an increase in the incidence of nonperforming bank loans creates a burden on financial intermediaries, leading to a reduction in credit availability.…”

“…Studies on information asymmetry demonstrate the importance of credit information sharing in credit markets and banking system fragility (Asongu, 2017;Biswas, 2019;Djankov et al, 2007;Ghosh, 2019;Grajzl & Laptieva, 2016;Guérineau & Léon, 2019;Jappelli & Pagano, 2002;Nakamuraa & Roszbach, 2018;Nana, 2014). Credit information sharing is an index which measures "rules affecting the scope, accessibility, and quality of credit information available through public or private credit registries."…”