European Journal of Law and Economics

, Volume 23, Issue 1, pp 71–88 | Cite as

Consumer credit information systems: a critical review of the literature. Too little attention paid by Lawyers?

  • Federico Ferretti


This paper reviews the existing literature on consumer credit reporting, the most extensively used instrument to overcome information asymmetry and adverse selection problems in credit markets. Despite the copious literature in economics and some research in regulatory policy, the legal community has paid almost no attention to the legal framework of consumer credit information systems, specially within the context of the European Union. Studies on the topic, however, seem particularly relevant in view of the establishment of a single market for consumer credit. This article ultimately calls for further legal research to address consumer protection concerns and inform future legislation.


Consumer credit reporting Review of the literature Legal framework 

JEL Classification

K2 G14 G21 017 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.



I am grateful to Andrew Campbell, Joan Loughrey, and Prof. Andrew Keay for valuable discussions and encouragement.

I would also like to thank Simon Davies and Gus Hossein of Privacy International for their professional example. Helpful comments and suggestions of two anonymous referees are acknowledged.

My special appreciation to Stella for her uninterrupted love and support.


  1. Akelof, G. (1970). The market for ‹Lemons’: Quality uncertainty and the market mechanism. Quarterly Journal of Economics, 28(3), 523–547.Google Scholar
  2. Andreeva, G., Ansell, J., & Crook, J. (2004). Impact of anti-discrimination laws on credit scoring. Journal of Financial Services Marketing, 9(1), 22–33.CrossRefGoogle Scholar
  3. Avrey, R. B., Calem, P. S., & Canner, G. B. (2004). Consumer credit scoring: Do situational circumstances matter? Journal of Banking and Finance, 28(4), 835.Google Scholar
  4. Benston, G. (1998). Regulating financial markets. London: Institute of Economic Affairs.Google Scholar
  5. Berger, A. N., & Udell, G. F. (1995). Relationship lending and lines of credit in small firm finance. Journal of Business, 68, 351–381.CrossRefGoogle Scholar
  6. Bradford, M. (2004). Full data-sharing could stem over-indebtedness concerns. Credit Risk International, November, 10–11.Google Scholar
  7. Campbell, T., & Kracaw, A. W. (1991). Financial Intermediation and the market for interest rate swaps. Journal of Financial Intermediation, 1, 362–384.Google Scholar
  8. Campion, A. (2001). Client information sharing in Bolivia. Journal of Microfinance, 3(1), 45–63.Google Scholar
  9. Cartwright, P. (2004). Banks, consumers and regulation. Oxford, UK: Hart Publishing.Google Scholar
  10. Davies, H. (1998). Why regulate. Henry thorton lecture. City University Business School, 4 Nov 1998.Google Scholar
  11. Dell’Ariccia, G. (2001). Asymmetric information and the structure of the banking industry. European Economic Review, 40, 1957–1980.CrossRefGoogle Scholar
  12. Diamond, D. W. (1984). Financial intermediation and delegated monitoring. Review of Economic Studies, 51, 393–414.CrossRefGoogle Scholar
  13. Diamond, D. W. (1991). Monitoring and reputation: The choice between bank loans and directly placed debt. Journal of Political Economy, 99(4), 689–721.CrossRefGoogle Scholar
  14. Diez Guardia, N. (2002). Consumer credit in the European Union. ECRI Research Report No. 1.Google Scholar
  15. Galindo, A., & Miller, M. J. (2001). Can credit registries reduce credit constraints? Empirical evidence on the role of credit registries in Firm Investment Decisions. Paper prepared for the Annual Meetings of the Inter-American Development Bank, March, Santiago, Chile, at on 01/08/05.Google Scholar
  16. Goodhart, C. (1995). The central bank and the financial system. Basingstoke: Mc Millan Press.Google Scholar
  17. Howells, G. G. (1995). Data protection, confidentiality, unfair contract terms, consumer protection and credit reference agencies. Journal of Business Law, 7, 343–359.Google Scholar
  18. Hunt, R. M. (2002). The development and regulation of consumer credit reporting in America. Working Paper No. 02-21, Federal Reserve Bank of Philadelphia.Google Scholar
  19. Hunt, R. M. (2005). A century of consumer credit reporting in America. Working Paper No. 05-13, Federal Reserve Bank of Philadelphia.Google Scholar
  20. Jaffee, D., & Russell, T. (1976). Imperfect information and credit rationing. New York: John Wiley & Sons.Google Scholar
  21. Jappelli, T., & Pagano, M. (2000). Information sharing in credit markets: The European experience. Working Paper No. 35, Centres for Studies in Economics and Finance, University of Salerno, Italy.Google Scholar
  22. Jappelli, T., & Pagano, M. (2002). Information sharing, lending and defaults: Cross-country evidence. Journal of Banking and Finance, 26(10), 2017–2045.CrossRefGoogle Scholar
  23. Jentzsch, N. (2003a). The regulatory environment for business information sharing. Working Paper 10.07.03 at on 02/08/05.Google Scholar
  24. Jentzsch, N. (2003b). The regulation of financial privacy: The United States Vs Europe. ECRI Research Report No. 5.Google Scholar
  25. Jentzsch, N., & Riestra, A. S. J. (2003). information sharing and its implications for consumer credit markets: United States vs. Europe. Working Paper, European University Institute Workshop ‹The Economics of Consumer Credit: European Experience and Lessons from the U.S.’, Florence.Google Scholar
  26. Johnson, H. (1991). Credit blacklist problems. International Banking Law, 9(12), 458–459.Google Scholar
  27. Johnson, H. (1992) A winning score: Oft review credit scoring. International Banking and Financial Law, 11(3), 35–36.Google Scholar
  28. Jolls, C., Sunstein, C., & Thalrer, R. (1998). A behavioural approach to law and economics. Stanford Law Review, 50, 1471.CrossRefGoogle Scholar
  29. Kallberg, J. G., & Udell, G. F. (2003). The value of private sector business credit information sharing: The U.S. Case. Journal of Banking and Finance, 27(3), 449–469.CrossRefGoogle Scholar
  30. Khalil, F., & Parigi, B. M. (2001). Screening, monitoring and consumer credit. EUI Working Paper, Florence, Italy.Google Scholar
  31. Klein, D. B. (1992). Promise keeping in great society: A model of credit information sharing. Economics and Politics, 4(2), 117–136.CrossRefGoogle Scholar
  32. Klein, D. B. (Ed.) Reputation: Studies in the voluntary elicitation of good conduct. Ann Arbor, Michigan, US: University of Michigan Press.Google Scholar
  33. Lanoo, K., & De la Mata Munoz, A. (2004). Integration of the EU consumer credit market – proposal for a more efficient regulatory model. CEPS Working Document No. 213/Nov 2004, Centre for European Policy Studies, Brussels.Google Scholar
  34. Lenaghan, T. (2001). Microfinance and the market for credit information in El Salvador. Division 41, Financial Systems Development and Banking Services, Oct. at on 29/07/05.Google Scholar
  35. Llewellyn, D. (1999). The economic rationale for financial regulation. FSA Occasional Paper, 1 April 1999, London.Google Scholar
  36. Love, I., & Mylenko, N. (2003). Credit reporting and financing constraints. World Bank Policy Research Working Paper 3142, October 2003.Google Scholar
  37. Luoto, J., McIntosh, C., & Wydick, B. (2004). Credit information systems in less-developed countries: Recent history and a test, at on 29/07/05.Google Scholar
  38. Marquez, R. (2002). Competition, averse selection, and information dispersion in the banking industry. Review of Financial Studies, 15(3), 901–926.CrossRefGoogle Scholar
  39. McIntosh, C., & Wydick, B. (2004). A decomposition of incentive and screening effects in credit market information systems. Working Paper – University of California at San Diego/University of San Francisco.Google Scholar
  40. Miller, M. J. (Ed.) (2003). Reporting systems and the international economy. Cambridge: Massachusetts, MIT Press.Google Scholar
  41. Oditah, F. (Ed.) (1996). The future of the global securities market. Oxford: Clarendon Press.Google Scholar
  42. Padilla, J. A., & Pagano, M. (1997). Endogenous communication among lenders and entrepreneurial incentives. Review of Financial Studies, 10(1), 205–236.CrossRefGoogle Scholar
  43. Padilla, J. A., & Pagano, M. (2000). Sharing default information as a borrower discipline device. European Economic Review, 44(10), 1951–1980.CrossRefGoogle Scholar
  44. Pagano, M., & Jappelli, T. (1993). Information sharing in credit markets. Journal of Finance, 48(5), 1693–1718.CrossRefGoogle Scholar
  45. Peek, J., & Rosengren, E. S. (1995). Banks and the availability of small business loans. Working Paper No. 95-1, Federal Reserve Bank of Boston.Google Scholar
  46. Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. Journal of Finance, 49(1), 3–37.CrossRefGoogle Scholar
  47. Posner, R. (1998). Rational choice, behavioural economics and the law. Stanford Law Review, 50, 1551.CrossRefGoogle Scholar
  48. Riestra, A. S. J. (2002). Credit bureaus in today’s credit markets. ECRI Research Report No. 4.Google Scholar
  49. Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71(3), 393–410.Google Scholar
  50. Stiglitz, J. E., & Weiss, A. (1988). Banks as social accountants and screening devices for the allocation of credit. National Bureau of Economic Research, No. 2710.Google Scholar
  51. Stiglitz, J. E., & Weiss, A. (1992). Asymmetric information in credit markets and its implications for macro-economics. Oxford Economic Papers, 44(4), 694–724.Google Scholar
  52. Vercammen, J. A. (1995). Credit bureau policy and sustainable reputation effects in credit markets. Economica, 62(Nov), 461–478.CrossRefGoogle Scholar
  53. Weill L. (2004). Efficiency of consumer credit companies in the European Union – a cross-country frontier analysis. ECRI Research Report No. 7.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.School of LawUniversity of LeedsLeedsUK

Personalised recommendations